MUMBAI: The Indian rupee moved in a narrow band on Monday as steady interbank dollar bids blunted positive cues from improved risk appetite globally, while the presence of state-run banks’ offers limited weakness in the local currency.
The rupee was last at 88.6750 against the US dollar as of 10:00 a.m. IST, nearly unchanged from its close at 88.66 in the previous session.
Asian currencies traded stronger against the dollar, while regional shares also climbed on optimism that the US federal government shutdown may soon end.
The US Senate on Sunday moved forward on a measure aimed at reopening the federal government.
MSCI’s gauge of Asian shares outside of Japan rose 1% and India’s equity benchmarks, the BSE Sensex and Nifty 50 advanced about 0.3% each as well.
The improved risk appetite offered little impetus to the rupee though, which has been bogged down by persistent local corporate dollar demand and muted foreign portfolio inflows, even as frequent market interventions since late-September have helped the currency hold above its record low of 88.80.
Foreign investors have net sold about $1.5 billion of Indian stocks in November so far, with the year-to-date outflow tally standing at $17.4 billion.
Two traders pointed out that the central bank was likely stepping in intermittently to support the rupee on Monday as well.
“The RBI’s defence of the 88.80 level has now become a visible line in the sand, keeping USD/INR capped, with strong resistance seen around 88.80–89.00 and support near 88.40,” said Amit Pabari, managing director at FX advisory firm CR Forex. Reuters
American Dollar Exchange Rate