MUMBAI: The Indian rupee may open marginally weaker on Monday, unable to take advantage of the recovery on Asian peers, with traders pointing to oil prices and dollar demand on non-deliverable forwards (NDFs) for the underperformance.
NDFs indicate the rupee will open at around 83.27-83.28 to the US dollar compared with 83.2450 in the previous session and within a whisker of the 83.29 record low.
Asian currencies were doing well at start of the week, up between 0.1% to 0.5% against the dollar.
The rupee is “not able to do much with the decent recovery” on Asia, a forex trader at a bank said.
“Difficult to say why in light of what has been happening in recent weeks in terms of the RBI,” he said.
“It may be oil prices and the price action on NDF.”
Indian rupee closes little changed
The Reserve Bank of India (RBI) has repeatedly intervened in the spot, futures and NDF markets to avert rupee’s fall to a record low, according to traders.
The 1-month USD/INR NDF rose in the New York session on Friday.
It had pulled back in Asia on Monday, similar to moves in the recent past.
Focus this week will be on rate decisions by three major central banks.
The Bank of Japan will decide whether to hike its existing yield cap on Tuesday, while the US Federal Reserve is expected to keep rates on hold on Wednesday.
The move higher in longer-dated Treasury yields has created “a meaningful tightening” of financial conditions and this affords the Fed time to wait, ING Bank said in a note.
The Bank of England follows on Thursday, and like the Fed, it is projected to make no changes to the policy rate.
Attention further be on a slew of important US data due this week.
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