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Demand for dollars from importers and slow pace of net FPI inflows into the financial markets weakened the rupee by 47 paise against the dollar on Monday vis-a-vis the previous close.
The Indian currency (INR) closed at 81.79 per dollar against the previous close of 81.32.
Though the rupee opened stronger at 81.26, it could not hold on to the gains despite weakness in the dollar Index as domestic equity markets had edged lower in intra-day trades.
“The forward premium is extremely low, probably at a decade low. Generally dollar supply from exporters is low during such phases,” said RK Gurumurthy, Head-Treasury, Dhanlaxmi Bank.
Kotak Mahindra Bank, in a report, said: “We expect INR to range between 81-82.50 in the near term…RBI has been conducting substantial buy/sell swaps in the near end, which has being keeping the forward premia under downside pressure.”
Motilal Oswal Commodities Broker, in a report, noted that on the domestic front, the focus (of the market0 will be shifting to the RBI policy statement; wherein the central bank is expected to raise the repo rate by another 35 basis points. But their comment on inflation and growth going ahead is likely to trigger volatility for the currency.
“Broadly, we expect the USD-INR pair to trade sideways with a negative bias and quote in the range of 80.60 and 82.30,” per the report.
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