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What is the story about?
The Indian rupee opened 3 paise stronger at 94.97 against the US dollar on Monday (June 1), compared with its previous close of 95.00, even as rising crude oil prices and expectations of foreign portfolio outflows weighed on sentiment.
The local currency opened marginally higher despite pressure on Asian currencies after Brent crude oil prices climbed more than 2.5% to around $93.4 per barrel.
The rise followed reports of escalating Israeli military action in Lebanon, which reduced expectations of an imminent extension of the ceasefire agreement between the United States and Iran.
Higher oil prices weighed on regional currencies, with the South Korean won leading losses among Asian peers.
Market participants said the rupee could face pressure from multiple factors, including foreign portfolio outflows, equity index-related adjustments, maturities in the non-deliverable forward market and routine corporate demand for dollars.
Foreign portfolio investors (FPIs) were net sellers of Indian equities worth more than $2 billion on Friday, according to provisional exchange data.
Traders, however, noted that the Reserve Bank of India's interventions continue to influence the rupee's movement. The central bank's actions have helped the currency recover from its record low of 96.96 per dollar touched in May.
Data released after market hours on Friday (May 29) showed the RBI's short forward dollar commitments declined to $95.3 billion at the end of April from over $100 billion in March. Separately, India's foreign exchange reserves fell to $681 billion in the week ended May 22, marking their lowest level in more than a year.
In a note, IFA Global said the RBI is likely to maintain a firm floor for the rupee as it gradually unwinds its large short dollar forward position. The advisory firm expects the USD/INR pair to trade in the 94.40-96.20 range over the next four to six weeks.
Among key indicators, the dollar index stood at 99.05, while Brent crude futures were up about 2.4% at $93.3 per barrel. The yield on the benchmark 10-year US Treasury note was at 4.47%.
-With Reuters inputs
The local currency opened marginally higher despite pressure on Asian currencies after Brent crude oil prices climbed more than 2.5% to around $93.4 per barrel.
The rise followed reports of escalating Israeli military action in Lebanon, which reduced expectations of an imminent extension of the ceasefire agreement between the United States and Iran.
Higher oil prices weighed on regional currencies, with the South Korean won leading losses among Asian peers.
Market participants said the rupee could face pressure from multiple factors, including foreign portfolio outflows, equity index-related adjustments, maturities in the non-deliverable forward market and routine corporate demand for dollars.
Foreign portfolio investors (FPIs) were net sellers of Indian equities worth more than $2 billion on Friday, according to provisional exchange data.
Traders, however, noted that the Reserve Bank of India's interventions continue to influence the rupee's movement. The central bank's actions have helped the currency recover from its record low of 96.96 per dollar touched in May.
Data released after market hours on Friday (May 29) showed the RBI's short forward dollar commitments declined to $95.3 billion at the end of April from over $100 billion in March. Separately, India's foreign exchange reserves fell to $681 billion in the week ended May 22, marking their lowest level in more than a year.
In a note, IFA Global said the RBI is likely to maintain a firm floor for the rupee as it gradually unwinds its large short dollar forward position. The advisory firm expects the USD/INR pair to trade in the 94.40-96.20 range over the next four to six weeks.
Among key indicators, the dollar index stood at 99.05, while Brent crude futures were up about 2.4% at $93.3 per barrel. The yield on the benchmark 10-year US Treasury note was at 4.47%.
-With Reuters inputs
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