RBI dollar sale holds rupee steady near record low amid strong bids

Rupee closed flat at 88.78 per dollar on Monday as RBI sold dollars to counter strong FPI demand and global dollar strength after the euro's fall

The rupee traded in a narrow range on Monday, hovering near its record low of 88.81 per dollar likely due to intervention by the Reserve Bank of India, said dealers. The local currency settled flat against Friday at 88.78 per dollar.

 

“The dollar was well bid by FPIs who continued taking funds out of the country and making RBI protect the 88.80 levels for now as dollar index too rose with Euro falling after the resignation of the French PM in just one day of his taking office,” said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP.

 

“Rupee may soon touch 89 if trade tensions are not solved as FPIs continue to sell Indian stocks and take money out to markets which are making new highs,” he added.

 

Market participants said that dollar inflows from expected Tata Capital IPO-related subscriptions did not materialise or were likely absorbed by demand in the market. Tata Capital opened its IPO for subscription on Monday, aiming to raise up to ~ 15,511 crore, the largest issue in the non-banking financial sector this year. The offering will be followed by LG Electronics India’s IPO on Tuesday, which plans to raise ~11,600 crore.

 

The dollar index was up by 0.73 per cent at 98.43. It measures the strength of the greenback against a basket of six major currencies.

 

“There was demand for dollars among importers. On the other side the RBI was selling dollars, that’s why the rupee was in a narrow range,” said a dealer at a state-owned bank.

 

The rupee has depreciated by 3.74 per cent in the current financial year so far, whereas, it has witnessed 3.58 per cent depreciation in the current calendar year.

 

The local currency has remained flat with values unchanged in October so far.