Mumbai: The Indian rupee entered the new trading week on a cautious note, weighed down by conflicting market forces steady intervention by the Reserve Bank of India (RBI), persistent dollar demand from importers, and a generally lacklustre performance across Asian currencies. Traders described the market mood as “balanced but uncertain,” with the rupee attempting to consolidate around ₹88 per US dollar.
The RBI continued to extend its support to the domestic currency after it came under heavy pressure in recent sessions. Central bank interventions in the spot and forward markets helped the rupee recover slightly from record lows seen earlier this month. On Monday, the one-month non-deliverable forwards (NDFs) indicated the rupee would open between ₹87.94 and ₹87.98 against the dollar, nearly unchanged from Friday’s close at ₹87.9750.
Market participants noted that the RBI’s moves have provided a short-term cushion against sharp depreciation. However, dealers also cautioned that such support may have limited impact unless global and domestic demand pressures ease. “Real sector flows are still pushing against the RBI’s efforts,” said one Mumbai-based foreign exchange trader.
Even as the RBI stepped in to defend the rupee, fresh dollar buying by importers dampened its recovery. The surge in importer demand especially from oil and manufacturing sectors has created upward pressure on the dollar-rupee pair, eroding some of the central bank’s gains.
Currency analysts warned that if the rupee weakens beyond ₹88, speculative long-dollar positions could re-emerge, potentially testing the RBI’s resolve to maintain stability. Importers, anticipating further volatility, have been hedging aggressively, contributing to steady demand for dollars in the market.
The broader Asian foreign exchange landscape offered little encouragement. Most regional currencies opened the week on a subdued note, reflecting global caution amid a slightly weaker U.S. dollar index. Adding to the uncertainty is the ongoing U.S. federal government shutdown, which has delayed several key economic data releases, leaving traders without clear direction.
The muted sentiment across Asia has reduced foreign investor appetite for emerging-market assets, including Indian equities and bonds. This, in turn, has limited capital inflows that could have supported the rupee.
Analysts say the rupee’s immediate path will depend on how effectively the RBI manages to balance market sentiment while absorbing importer demand. If the central bank continues its interventions at current levels, the rupee may trade in a narrow band around ₹88 in the short term.
Externally, market watchers are keeping an eye on U.S. economic indicators, global oil price trends, and any geopolitical developments that could influence foreign exchange flows. Reports citing U.S. President Donald Trump’s remarks about India’s commitment to halt Russian oil imports also added a layer of political intrigue to the currency’s outlook.
As trading unfolds, the rupee appears caught between resilience and renewed vulnerability. The RBI’s presence has ensured stability for now, but strong dollar demand and a tepid global backdrop continue to act as counterweights. For the Indian currency, this week may once again be defined by the central bank’s ability to strike a fine balance between market intervention and economic fundamentals.