Mumbai: The Indian rupee is set to open slightly higher on Monday, as the U.S. dollar softened and expectations grow that the Reserve Bank of India (RBI) will continue defending a crucial floor level for the currency. Market participants anticipate modest gains for the rupee amid a cautious backdrop of foreign fund outflows and steady import demand.
According to one month non deliverable forward (NDF) quotes, the rupee may open in the ₹88.60 ₹88.62 per dollar range, following Friday’s close near ₹88.66. Over the past week, the rupee has oscillated within a narrow band of roughly ₹88.40 to ₹88.80, reflecting the RBI’s active interventions in the currency market, muted equity inflows, and typical import related pressures.
Currency traders note that the RBI has been consistently maintaining a floor around the ₹88.80 mark, making it difficult for the rupee to weaken beyond that level. “The RBI’s support is visible, and the currency is likely to trade within a tight range unless global developments sharply change capital flows,” said a trader at a private bank.
Regional markets are seeing similar trends, with most Asian currencies strengthening as the U.S. dollar index dipped. Investors also welcomed optimism in the United States, where a potential end to the federal government shutdown could clarify the economic outlook and influence the Federal Reserve’s policy path.
Financial indicators highlight the nuanced environment for the rupee. The one month onshore forward premium stands at about 13.25 paise, while foreign portfolio investors recently sold approximately US$307.4 million in equities and US$54.8 million in bonds on 6 November, according to National Securities Depository Limited (NSDL) data. Brent crude futures rose by 0.5% to $63.9 a barrel, while U.S. 10 year Treasury yields hovered near 4.13%, factors that continue to influence rupee stability.
Despite the mildly positive outlook, analysts caution that the rupee’s potential for substantial gains remains limited. External pressures, including sustained import demand, volatile crude prices, and fluctuations in global capital flows, could cap appreciation. Observers suggest that close attention to RBI interventions, foreign investment flows, and U.S. economic developments will be critical in gauging the currency’s near term trajectory.
In conclusion, the rupee is likely to benefit from a softer U.S. dollar and the RBI’s continued market support. However, with underlying vulnerabilities in capital flows and global economic factors, the Indian currency is expected to remain in a cautious trading range in the coming days.