Indian Rupee Stable Amidst Dollar Strength and Oil Prices: Market Insights

The Indian rupee remained in a limited range against the US dollar during early trading on Monday, as the domestic stock market showed a negative trend. Foreign exchange traders mentioned that the strength of the US dollar in the global market and higher crude oil prices had a dampening effect on the local currency, constraining its upward movement. At the start of trading in the interbank foreign exchange market, the rupee commenced at 83.52 and then rose marginally to 83.45 against the US dollar, marking a 12 paise increase from its previous closing rate. On the previous Friday, the rupee touched a low of 83.63 before eventually concluding at 83.57, showing a 4 paise improvement from its previous close. IFA Global stated in a research note that the price action on Friday indicated deliberate intervention by the central bank, and projected that the rupee is likely to trade within the range of 83.40-83.67 with sideways price movement. Concurrently, the dollar index, which measures the dollar’s strength against a basket of six currencies, was trading 0.03% higher at 105.82. Meanwhile, Brent crude futures, the global oil benchmark, decreased by 0.06% to reach USD 85.19 per barrel. Addressing the currency market, Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, mentioned that the Indian rupee had slightly gained on Friday, and expected it to remain within a limited range with the Reserve Bank of India (RBI) maintaining a close watch near the 83.60 level to protect it after the USD/INR pair reached an all-time low of 83.67 the previous week, due to continuous outflows related to equities and the strengthening of the dollar index. In the domestic stock market, the 30-share BSE Sensex dropped by 349.25 points, or 0.45%, to 76,860.65. Similarly, the broader NSE Nifty decreased by 103.15 points, or 0.44%, to 23,397.95. Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Friday, as they divested shares worth Rs 1,790.19 crore, according to exchange data. Moreover, India’s foreign exchange reserves reduced by USD 2.922 billion to reach USD 652.895 billion for the week ending June 14, as announced by the Reserve Bank on Friday. In the prior reporting week, the reserves had surged by USD 4.307 billion to USD 655.817 billion, marking a new all-time high after consecutive weeks of increase in the reserves.