MUMBAI: The Indian rupee is poised to rise on Monday, building on the momentum from the previous session in which the central banks’ interventions prompted the exit of speculative dollar-long positions.
The one-month non-deliverable forward indicated the rupee will open at 85.40-85.42 to the US dollar, compared with its close of 85.5325 in the previous session.
The rupee catered to a lifetime low of 85.8075 on Friday, leading to heavy dollar sales by the Reserve Bank of India. On the back of what a trader said “was a very busy intervention”, the speculative dollar-long positions booked profits.
“The excessive positions are being flushed out now that the RBI has intervened with intent,” a currency dealer at a mid-sized private bank said. “This corrective downward move (on dollar/rupee) likely extends to 85.30 at best, not beyond that. I see this dip an opportunity to buy.”
Indian rupee to remain burdened by dollar outlook, importer demand
The rupee has been struggling for several weeks due to dollar demand in the non-deliverable forward market, the weakness in Asian peers on concerns over US President-elect Donald Trump’s trade policies, the rally in US Treasury rates and the dip in India’s growth rate.
The RBI has been intervening to slow the pace of the currency’s decline, although its dollar sales have been a big factor in driving India’s forex reserves to a seven-month low.
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