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What is the story about?
The Indian rupee opened slightly higher against the US dollar on Monday (September 21), tracking easing crude oil prices and as traders watched foreign portfolio flows for further direction.
The rupee opened at 95.81 per US dollar, compared with Friday’s (September 18's) close of 95.87.
Brent crude prices fell around 2% to $101.70 a barrel on Monday (September 21), after oil prices had moved above the $100 mark amid concerns over disruptions to energy supplies linked to the Iran-US conflict. Expectations of a diplomatic solution during the United Nations meetings this week also helped ease some pressure on oil prices.
For India, elevated crude prices remain a concern because the country imports most of its crude oil requirements. Higher oil prices can increase the import bill and put pressure on the current account as well as the rupee.
At the same time, traders are watching foreign portfolio flows for support to the domestic currency. The National Stock Exchange's $2.3 billion initial public offering was fully subscribed on Friday, with foreign investor participation expected to remain in focus as the issue progresses.
Goldman Sachs said in a note that while elevated oil prices could keep India's current account under pressure, improved capital-flow dynamics could keep the USD/INR pair within a 95-97 range.
The brokerage also pointed to the Reserve Bank of India's measures to support capital inflows, including steps related to overseas foreign currency deposits and borrowings. These measures have helped India's foreign exchange reserves rise to around $781 billion, according to the note.
The RBI's reserves provide a buffer against external pressures and give the central bank room to manage sharp movements in the rupee. Goldman Sachs said the central bank has several tools available to limit the upside in USD/INR, even if the broader US dollar strengthens.
Meanwhile, other Asian currencies were largely range-bound on Monday (September 21), while regional equities edged higher, with chipmakers gaining amid continued demand for artificial intelligence-related infrastructure.
-With Reuters inputs
The rupee opened at 95.81 per US dollar, compared with Friday’s (September 18's) close of 95.87.
Brent crude prices fell around 2% to $101.70 a barrel on Monday (September 21), after oil prices had moved above the $100 mark amid concerns over disruptions to energy supplies linked to the Iran-US conflict. Expectations of a diplomatic solution during the United Nations meetings this week also helped ease some pressure on oil prices.
For India, elevated crude prices remain a concern because the country imports most of its crude oil requirements. Higher oil prices can increase the import bill and put pressure on the current account as well as the rupee.
At the same time, traders are watching foreign portfolio flows for support to the domestic currency. The National Stock Exchange's $2.3 billion initial public offering was fully subscribed on Friday, with foreign investor participation expected to remain in focus as the issue progresses.
Goldman Sachs said in a note that while elevated oil prices could keep India's current account under pressure, improved capital-flow dynamics could keep the USD/INR pair within a 95-97 range.
The brokerage also pointed to the Reserve Bank of India's measures to support capital inflows, including steps related to overseas foreign currency deposits and borrowings. These measures have helped India's foreign exchange reserves rise to around $781 billion, according to the note.
The RBI's reserves provide a buffer against external pressures and give the central bank room to manage sharp movements in the rupee. Goldman Sachs said the central bank has several tools available to limit the upside in USD/INR, even if the broader US dollar strengthens.
Meanwhile, other Asian currencies were largely range-bound on Monday (September 21), while regional equities edged higher, with chipmakers gaining amid continued demand for artificial intelligence-related infrastructure.
-With Reuters inputs
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