2 hrs ago
Rupee Near 96 as Oil Prices and Foreign Outflows Weigh
The Indian rupee was worth slightly less against the US dollar in early trading on Monday.
It moved from 96.20 to 96.26 rupees for one dollar.
Expensive oil and overseas investors selling Indian shares put pressure on the currency.
A stronger dollar also made things harder for the rupee.
Traders said the Reserve Bank of India sold dollars to help prevent a bigger fall.
Investors were watching for the Reserve Bank’s decision on interest rates on Wednesday.
Many economists expected it to raise its rate.
India’s foreign currency reserves also fell during the week ending September 25.
The rupee opened at 96.20 and moved to 96.26 per US dollar in early Monday trade, one paisa weaker than its previous close.
High crude prices, foreign investor selling, elevated import costs and a stronger dollar were cited as pressures on the currency.
Traders said Reserve Bank of India dollar sales helped limit sharper losses and intraday volatility.
Economists expected the RBI to raise its policy rate by 25 basis points to 5.50 per cent, with its decision due Wednesday.
India’s foreign exchange reserves fell USD 18.343 billion to USD 747.557 billion in the week ended September 25.
- Who
- The Indian rupee, the Reserve Bank of India, and foreign investors.
- What
- The rupee traded at 96.26 per US dollar, under pressure from oil prices, foreign outflows and dollar strength.
- Where
- The interbank foreign exchange market in Mumbai, India.
- When
- Early Monday trade; the RBI decision was expected Wednesday. Reserves data covered the week ended September 25.
- Why
- Elevated crude oil prices, foreign portfolio selling, higher import costs and a strong dollar weighed on the rupee.
Factors Limiting Rupee Losses
Factors Pressuring the Rupee
RBI market action
Factors Limiting Rupee Losses
Traders said RBI dollar sales helped smooth intraday volatility and cap sharper rupee losses.
Factors Pressuring the Rupee
The reported fall in foreign exchange reserves indicated the scale of the RBI’s currency defence, while pressure from imports and the strong dollar continued.
Currency outlook
Factors Limiting Rupee Losses
RBI intervention was helping contain the rupee’s movements.
Factors Pressuring the Rupee
Anindya Banerjee said the dollar-rupee pair had an upward bias within the 95.50–96.50 range, citing oil above USD 100, high US yields and foreign portfolio selling.
Key facts
- Rupee opening rate
- 96.20 per US dollar
- Rupee early-trade rate
- 96.26 per US dollar
- Previous close
- 96.25 per US dollar
- Brent crude
- USD 101.34 per barrel, down 0.89 per cent in futures trade
- Dollar index
- 102.47, up 0.54 per cent
- Net FII equity selling
- Rs 9,484.22 crore on Thursday
- Foreign exchange reserves
- USD 747.557 billion for the week ended September 25, down USD 18.343 billion
- Expected RBI rate decision
- Most economists cited expected a 25-basis-point increase to 5.50 per cent
Quotes
Anil Kumar Bhansali
Head of treasury and executive director at Finrex Treasury Advisors LLP.
“The rupee closed at its weakest in over two months, and carries an upward bias for the pair within 95.50–96.50 on oil above USD 100, US yields at multi-year highs and heavy foreign portfolio selling.”
deccanchronicle.com
thehansindia.com
“Though we wait for RBI action on rupee, as dollar buying by oil companies will continue while FPIs will continue to remain in sell mode…”
deccanchronicle.com
thehansindia.com
Sources
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