Indian rupee seen opening stronger as Brent drops 4% and inflows swell
The rupee extended its rebound as traders pointed to likely RBI intervention via state-run banks, with lower oil prices and earlier dollar sales continuing to support sentiment.
The Indian rupee extended its rebound, rising 0.3% to 95.6425 per dollar and hovering near its strongest levels in two weeks as traders pointed to likely Reserve Bank of India intervention in the foreign-exchange market. Four traders told Reuters that state-run banks were seen offering dollars, most likely on behalf of the RBI, suggesting the central bank was continuing to support the currency after its earlier sharp rally. The rupee’s recovery has been aided by reported RBI dollar sales, slumping oil prices and confidence-boosting remarks from Governor Sanjay Malhotra, who said recent RBI measures to attract foreign capital had mobilized nearly $32 billion through channels including Foreign Currency Non-Resident deposits. Lower crude prices remain a key support for India’s currency because the country is the world’s third-largest crude oil importer and is highly sensitive to the effect of oil on imported inflation and the current account deficit.
- Foreign Currency Non-Resident deposits: Bank deposits in foreign currency held by non-resident Indians, used to channel overseas funds into India.
- imported inflation: Price pressures that arise when the cost of goods bought from abroad, such as oil, increases.
- current account deficit: A gap that occurs when a country spends more on imports, services and income payments than it earns from exports.