Indian rupee dips on dollar demand at RBI reference rate, Asian weakness

MUMBAI: The Indian rupee edged lower on Monday, tracking Asian peers and pressured by dollar demand around the Reserve Bank of India’s reference rate.

The rupee ended at 90.2775 per dollar against 90.1975 on Friday. The currency traded in a narrow range of 10 paisa and witnessed its fourth straight drop. Dollar/rupee forward premiums moved higher after bottoming out on Friday.

The RBI reference rate is the daily benchmark used to settle contracts that often attracts concentrated dollar buying or selling.

The rupee’s retreat reflects underlying dollar demand following the RBI intervention that triggered a recovery in the currency last week, traders said.

Traders said routine corporate dollar buying and a lack of offers from exporters kept the currency on the defensive. Weakness in regional peers such as the Malaysian ringgit and Philippine peso added to the drag.

Read more: Indian rupee down against dollar

Asian stocks climbed with AI-linked themes in focus at the start of the first full trading week of the year, while oil prices dipped on the view U.S. military action in Venezuela would be unlikely to disrupt a well-supplied energy market.

In India, broader investor sentiment continues to remain cautious amid trade-related uncertainty, including concerns around the absence of a U.S.-India trade deal and tariff rhetoric linked to India’s Russian oil purchases.

U.S. President Donald Trump has warned of higher tariffs on India over Russian oil purchases. The U.S. doubled import tariffs on Indian goods to 50% last year as punishment for its heavy buying of Russian oil.

ICICI Securities Primary Dealership believes that the central bank may again be quite tolerant of a strong rebound in the rupee, if that starts to occur, in order to hurt any speculative shorts.

But it sees the risk of the rupee staying weaker for some time, until a U.S. trade deal is signed and foreign flows resume.