By Jaspreet Kalra
MUMBAI, – The Indian rupee lumbered in a thin band in early trade on Monday, hemmed in between dollar demand due to elevated oil prices and sustained market interventions by the central bank.
The currency was at 95.6675 per dollar, little changed from its close at 95.6950 in the previous session.
The rupee’s trading ranges have shrunk over the last two weeks as the Reserve Bank of India has stepped up interventions to anchor it amid pressures ranging from higher oil prices to surging global bond yields.
On Monday, state-run banks were spotted offering dollars yet again, traders said, most likely on behalf of the RBI.
Oil prices dipped in Asia trading but held above the $90 per barrel mark as investors awaited an announcement from Washington about more sanctions on Iran that may further disrupt supplies from the Middle East.
The warring nations have not conducted military strikes against each other for weeks, but they also have not engaged in meaningful talks to end the six-month-old conflict.
“Market is reluctant to short dollars given Brent above USD 90 per barrel but at the same time is not able to go long either given RBI presence around 95.80. This has limited activity and compressed intraday ranges,” said Abhishek Goenka, chief executive at FX advisory firm IFA Global in Mumbai.
Asian currencies were mostly rangebound while regional stocks slipped led by a 3% drop in South Korean shares. India’s benchmark equity gauge, Nifty 50, was up 0.1%.
Looking ahead, traders will keep their focus on oil prices while also watching the impact of maturing dollar-rupee derivative contracts later this week alongside month-end corporate flows.
(Reporting by Jaspreet Kalra; Editing by Sonia Cheema and Mrigank Dhaniwala)
