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Forex▲ Bullish
Rupee Edges Higher as Oil Slide, Foreign Inflows Offset Dollar Strength
Rupee closes at 83.47, up from 83.52, as Brent crude drops 1.5% and foreign inflows hit $2.5 billion in June. RBI caps 83.50 with spot intervention.
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The rupee closed slightly stronger on Monday, helped by a drop in crude oil prices and continued foreign portfolio inflows into local equities and debt, traders said.
The currency settled at 83.47 against the dollar, up from 83.52 in the previous session. It traded in a narrow 83.42-83.54 band through the day.
Brent crude fell about 1.5% on the session, extending last week's decline. Lower oil prices ease India's import bill and reduce pressure on the current account deficit, a key variable for rupee stability. India meets roughly 85% of its oil needs through imports.
Foreign investors have bought about $2.5 billion in Indian equities and bonds so far this month, provisional exchange data showed. The inflows have helped offset dollar demand from importers and state-run banks, which typically buy dollars on behalf of oil marketing companies.
The Reserve Bank of India was active in the spot market through the session, selling dollars to prevent the rupee from breaching the 83.50 level, two traders said. The central bank's intervention has kept the rupee in a tight range near 83.50 for most of the past two weeks.
State-run banks were spotted offering dollars in the afternoon session, likely on behalf of the RBI, one of the traders said. The RBI typically operates through multiple state-run lenders to avoid signalling its presence.