The Indian rupee strengthened versus the US dollar, closing at 83.87/$1on Monday, due to a weaker dollar index and a fall in crude oil prices which softens India’s inflation and trade deficit.
The rupee closed at 83.87 against the US dollar, versus its previous close of 83.94/$1 on Friday, LSEG data showed. The currency strengthened to 83.84 during the day, the strongest since 6th August, but dollar demand from public sector banks capped its gains, traders said.
The rupee moved from 83.84/$1 to 83.94/$1 during Monday’s trade, LSEG data showed. The dollar index was at 102, its weakest level in more than 6 months, according to Reuters.
Currency dealers said that likely interventions by RBI kept the rupee’s appreciation in check on Monday.
“A large public sector bank started buying (dollars) when the currency touched 83.85/$1 and there is a good possibility that the PSU bank may be buying on behalf of the central bank, as RBI may not be comfortable with the upside in rupee”, said Anil Bhansali, Head Of Treasury at Finrex Treasury Advisors LLP
Crude oil prices fell to $78.96 per barrel, from $80.32 per barrel last week due to muted Chinese demand. Last week, The Organization of the Petroleum Exporting Countries (OPEC) reduced its oil demand growth forecast for 2024, citing softness in China.
A fall in crude oil prices is good for domestic trade deficit and inflation as India is a major importer of the commodity.
Investors will pay attention to the minutes of the Fed’s most recent meeting due on Wednesday, and remarks from Fed policymakers, including Chair Jerome Powell who is slated to speak on Friday, will be in focus this week for guidance on rate cuts in the world’s largest economy.
