Indian Rupee Sees Modest Gains Amidst Dollar Sales
In early trading on Monday, the Indian rupee experienced slight gains against the U.S. dollar, buoyed by dollar sales from foreign banks. However, traders remain cautious as U.S. bond yields maintain elevated levels, potentially limiting further upside for the rupee.
Rupee Strengthens Slightly Against the Dollar
As of 10:00 a.m. IST, the rupee stood at 83.4325 against the U.S. dollar, a modest improvement from its previous close at 83.47. The currency had reached a record low of 83.5750 on Friday but rebounded following significant intervention from the Reserve Bank of India (RBI).
Foreign Banks’ Dollar Offers Bolster Rupee
Traders noted the influence of “large offers” from foreign banks to sell dollars, possibly on behalf of custodial clients, which supported the rupee’s performance on Monday. This intervention helped counterbalance the currency’s recent downward trajectory.
Asian Currencies Remain Cautious
While most Asian currencies exhibited subdued movements, there was a sense of relief amid diminishing concerns about an escalation of conflict in the Middle East. This sentiment contributed to the stability of regional currencies, including the rupee.
Market Outlook and Focus on U.S. Economic Indicators
Analysts anticipate the rupee to undergo a “consolidation phase” on Monday, with near-term resistance identified at 83.20. Additionally, attention is directed towards dollar-rupee forward premiums, which saw a decline, and upcoming U.S. economic data, particularly the personal consumption expenditure inflation report due on Friday, which may offer insights into the Federal Reserve’s monetary policy direction.