Key Takeaways
- Indian rupee expected to open in the 95.90-95.95 band on Monday.
- Central bank intervention expected to limit currency weakness.
- Foreign portfolio flows linked to a large domestic IPO could offer support.
The Indian rupee is expected to make a quiet start on Monday, opening in the 95.90-95.95 band, marginally weaker than its close at 95.8725 on Friday.
Traders are closely watching oil prices and foreign portfolio flows for directional cues, with hopes that central bank intervention will limit the currency’s weakness.
Oil prices slipped on Monday but held above $100, with Brent prices down 2% at $101.7 per barrel. Hopes of a diplomatic solution to the Iran conflict amid the UN meeting this week also helped cool prices.
Goldman Sachs noted that although elevated oil prices may keep the current account under pressure, improved capital flow dynamics should keep USD/INR within the 95-97 range.
The central bank’s capital inflow measures, which included sops for raising overseas FX deposits and borrowings, have helped lift India’s FX reserves to about $781 billion, granting the central bank firepower to fund the current account gap and limit rupee depreciation.
Analysts expect foreign portfolio flows linked to a large domestic IPO, the National Stock Exchange of India’s $2.3 billion IPO, to offer support to the rupee on Monday. The NSE’s IPO was fully subscribed on Friday.
Regional currencies were mostly range-bound, while share markets edged higher as AI’s insatiable demand for data buoyed chipmakers. Futures markets pointed to a quiet start for equities in Mumbai.
Traders are optimistic that the central bank’s tools, including those for raising overseas FX deposits and borrowings, will help cap the upside in USD/INR, even if the broad USD rebounds.
