MUMBAI: The Indian rupee closed nearly flat on Monday, as dollar demand from importers and foreign banks offset early gains driven by a rise in most Asian currencies.
The rupee closed at 83.90 against the US dollar, nearly unchanged from its close at 83.89 in the previous session. The currency hit a peak of 83.81 in early trading.
Like last week, the rupee was unable to hold onto gains pressed by dollar demand from importers and foreign banks, a trader at a private bank said.
It has struggled to benefit from the dollar’s slump in August and is likely to miss out on the emerging market rally after Federal Reserve Chair Jerome Powell signalled support for imminent rate cuts on Friday.
The rupee is expected to trade between 83.75 and 84 in the near-term, Amit Pabari, managing director at FX advisory firm CR Forex said.
Strong dollar demand from importers and outflows from equities have both contributed to limiting the rupee’s gains in recent sessions, Pabari said. Overseas investors have pulled out about $2 billion from Indian stocks over August so far.
The dollar index was at 100.7, hovering close to its lowest level since December, while most Asian currencies rose between 0.1% to 0.7%.
Meanwhile, dollar-rupee forward premiums jumped after Powell’s more dovish-than-expected comments raised the odds of a larger rate cut at the Fed’s September meeting.
The dollar-rupee 1-year forward premium rose to a peak of 2.14%, the highest since May 2023, before edging lower.
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