The Indian rupee opened stronger on Monday, rising 8 paise to 87.50 against the US dollar in early trade. This uptick comes as the American currency showed signs of weakness, and investors remained cautious ahead of key global events. The currency markets are clearly in a wait-and-watch mode, with all eyes on the upcoming US-Russia talks and inflation data from India and the US.
Forex traders noted that the rupee started the week with modest gains. The currency is expected to hover between 87.25 and 87.80 in the near term. Market participants are keenly anticipating the consumer price index (CPI) data from both India and the US, along with the outcome of the US-Russia discussions scheduled for August 15. These events could dictate the rupee’s trajectory in the coming days.
At the interbank foreign exchange market, the domestic unit opened at 87.56 against the dollar before climbing to an early high of 87.50. On Friday, the rupee had managed to recover from its intra-day losses, closing flat at 87.58.
The dollar index, which measures the greenback’s strength against a basket of major currencies, dipped 0.11% to 98.07. Meanwhile, Brent crude futures also saw a decline, falling 0.48% to $66.27 per barrel. Lower crude prices often provide some relief for oil-importing countries like India, helping ease pressure on the domestic currency.
Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP, pointed out that the US-Russia talks could have significant implications for India. A potential ceasefire between the two nations might help India avoid additional 25 basis points tariffs imposed by the US. India has consistently advocated for resolving conflicts through dialogue, as reiterated by Prime Minister Narendra Modi’s stance that this is “not an era of war.”
Bhansali also highlighted that the Reserve Bank of India (RBI) is actively managing the rupee’s movement by intervening in the forex market. Exporters might consider selling their near-term receivables, while importers could take advantage of the lower levels to secure their positions.
In other economic updates, India’s forex reserves saw a notable drop of $9.322 billion, bringing the total to $688.871 billion for the week ending August 1. This marks one of the steepest declines in recent memory. In contrast, reserves had risen by $2.703 billion in the previous week.
Domestic equity markets started the week on a positive note, with the Sensex climbing 104.84 points to 79,962.63 and the Nifty gaining 55.85 points to 24,419.15. Foreign institutional investors (FIIs) also turned net buyers after a prolonged phase of selling, purchasing equities worth Rs 1,932.81 crore on Friday. This shift in sentiment could bring some stability to the markets in the days ahead.
The rupee’s movement remains a focal point for traders and policymakers alike. With global developments and economic data releases lined up, the currency’s direction will likely stay volatile in the short term. Market players are bracing for potential surprises, and the RBI’s continued interventions will play a crucial role in maintaining balance.