Indian rupee dragged by weaker Asian peers, held up by central bank line

MUMBAI: The Indian rupee is set to open the week under pressure following weakness in Asian peers, while traders expect the central bank’s well established support zone to limit losses, holding the pair inside a narrow range.

The 1-month non-deliverable forward indicated the rupee will open largely flat against the US dollar, having settled at 88.7425 on Friday.

Currency traders said the rupee will likely continue in a rangebound phase on Monday, stuck between regional cues and the Reserve Bank of India’s staunch defence of the 88.80 level, barring a significant turn in Fed rate expectations or definitive news on a U.S.–India trade deal.

There is “distinct lack of energy” on either side, an FX spot trader at a private sector bank said.

“Until we have fresh impulse, we’re essentially trading the same ranges,” a trader said.

The rupee moved in a band of just over 20 paise last week, underscoring how tightly controlled the pair has been amid predictable RBI activity.

Bankers said that the outlook is unlikely to shift substantially unless USD/INR pushes beyond 88.80 into new record low territory.

Asia struggles

Asian currencies traded lower on Monday with the Taiwenese dollar and the Korean pacing declines, while the dollar index inched up.

Investors are eyeing a host of U.S. economic data now that the federal shutdown is over, looking for hints about which way the Federal Reserve’s December rate decision may go.

The heavily scrutinised September non-farm payrolls report is due on Thursday.

The market response to U.S. President Donald Trump’s decision to roll back tariffs on more than 200 food items was largely subdued. Analysts noted that the shift had been widely expected considering cost-of-living pressures.