Rupee set for quiet open, supported by inflows; oil, month-end activity eyed
The Indian rupee is poised for a quiet start to the week, buoyed by robust capital inflows, while traders keep an eye on oil prices and anticipated interventions by the central bank to keep the currency on a steady footing.
The rupee is expected to open in the 95.65-95.70 range, per traders, having settled at 95.6950 to the dollar on Friday.
Oil prices slipped on Monday as investors awaited an expected announcement from Washington about imposing more sanctions on Iran that may further disrupt energy supplies from the Middle East. U.S. President Donald Trump has also threatened to impose sanctions on Iran's trading partners.
Uncertainty over the conflict could keep risk appetite curtailed but pressure on the rupee is expected to be offset by the Reserve Bank of India's presence in the market, similar to the last two weeks.
Over the weekend, the central bank said it has garnered nearly $73 billion under measures rolled out in June to strengthen India's balance of payments, helping lift FX reserves just shy of a record high.
"We expect the RBI to use inflows to reduce its FX forward book and/or rebuild FX reserves, rather than allow a material appreciation of the currency," analysts at Goldman Sachs said in a note.
The firm has revised its three-, six- and 12-month rupee forecasts weaker to 96,97,97 from 94,95,96, respectively, after the RBI brought forward the closure of the discounted hedging facility for overseas deposits by a month.
Elsewhere, Asian currencies and stocks were mostly rangebound, with investors awaiting results from chip major Nvidia later this week followed by a key speech from Federal Reserve Chair Kevin Warsh on Friday.
