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The Indian rupee closed slightly weaker on Monday but managed to outperform its Asian peers which dipped after the 10-year US treasury yield rose on Friday and the dollar showed resilience despite some softening in US economic data over last week.
The rupee closed at 82.7475, little changed from 82.7150 in the previous session. Its Asian peers weakened against the US dollar, with the Thai baht and Malaysian ringgit leading the losses.
Routine inflows helped the rupee amid thin trading on a US holiday, a foreign exchange trader at a state-run bank said.
The absence of cash dollar demand due to the Labour Day holiday in the United States on Monday also contributed to a calm trading session for the local currency, traders added.
The dollar index drifted lower to 104.11 after rallying to 104.26 on Friday.
Also read: Sensex, Nifty advance on hopes of Fed rate pause, China stimulus
"We see little to challenge a strong dollar this week and could see DXY (dollar index) edging up to the 104.50-70 area," ING Bank stated in a note.
A rally in crude oil prices is likely to weigh on the rupee though. Brent crude futures were at $88.43 after hitting their highest point in more than six months on Friday.
"Had crude prices not been here, the rupee would have been closer to 82.00," said Sajal Gupta, head of forex and rates at Edelweiss Financial Services.
India's import of discounted Russian crude oil fell to a seven-month low in August, while oil imported from Saudi Arabia rose.
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