Weekly Opening Sees Modest Decline
The Indian rupee kicked off the week with a subtle dip, dropping 4 paise to hover at ₹88.69 per US dollar during early Monday sessions. This minor setback underscores the prevailing unease in worldwide markets, driven by factors like the US government shutdown, surging oil costs, and the Reserve Bank of India’s (RBI) measured responses. Opening at ₹88.64 before settling lower, the currency closed the prior Friday at ₹88.65, illustrating traders’ hesitancy amid diminished global risk tolerance and a preference for the secure US dollar.
Amit Pabari, Managing Director at CR Forex Advisors, noted that market eyes are fixed on the RBI’s position, with the 88.80 threshold serving as a key psychological barrier. He anticipates resistance between 88.80 and 89.00, support around 88.40, and potential near-term stabilization in this band.
US Shutdown Bolsters Dollar, Oil Surge Compounds Strain
The persistent US government shutdown is unusually propping up the dollar by restricting its supply through halted expenditures, leading to a 0.08 percent uptick in the dollar index to 99.68. This fortification pressures emerging currencies like the rupee, as capital shifts toward safer havens, though experts suggest the dollar’s surge may fade if the US deadlock drags on and erodes trust.
Compounding the issue, Brent crude oil climbed 0.66 percent to $64.05 a barrel, straining India as a major importer. Elevated oil expenses inflate dollar demand for imports, further softening the rupee. Nonetheless, current price points are deemed sustainable, bolstered by the RBI’s substantial forex reserves to cushion against fluctuations.
RBI Interventions and Positive Equity Signals Shape Outlook
The RBI has been proactive in forex markets to curb sharp rupee slides, prioritizing incremental, evidence-based tweaks over aggressive actions. Reserves dipped $5.62 billion to $689.73 billion for the week to October 31, yet they rank among the globe’s highest, offering robust protection from external jolts. Pabari maintains a medium-term bullish view on the rupee, predicting advances to ₹88.00 or ₹87.70 if it breaches ₹88.40.
In contrast to currency woes, Indian stocks showed resilience, with the Sensex advancing 202 points to 83,418 and Nifty gaining 68 points to 25,560 early on. Foreign investors injected ₹4,581 crore into equities last Friday, signaling faith in India’s solid fundamentals, including robust earnings, controlled inflation, and infrastructure pushes.
Looking forward, the rupee’s path hinges on international shifts; prolonged US issues or oil hikes could spur volatility, but India’s strong growth and inflation management should provide equilibrium. The US Federal Reserve’s policy signals could also sway flows to markets like India. Overall, this dip signifies resilience rather than fragility, with RBI oversight and investor optimism poised to sustain the currency’s steadiness.
