While a depreciating bias will be maintained in the near and medium term, the RBI is likely to intervene whenever there are excesses on either side, according to Vishad Turakhia, managing director of Equirus Securities Pvt.
The RBI has deterred undue volatility in rupee by not just selling but also buying when inflows are positive to build reserves. These reserves are, therefore, used to mitigate the downside in rupee, Turakhia said.
Fundamentally, however, India’s positive story continues with relative growth attractiveness and stable macros, Turakhia said.
India’s trade deficit was reported at $20.78 billion in September, falling below the expected $24.64 billion.
Traders will watch out for the European Central Bank’s monetary policy meeting and key US economic data, which may further influence the rupee’s trajectory.
“Intermittent shocks will persist with geopolitics, US elections and China-related news, which the RBI is likely to cushion from its reserves,” Turakhia added.
The Brent crude was trading 0.31% higher at $74.53 a barrel as of 3:41 p.m. The US Dollar Index was down 0.03% at $103.56.
