Rupee trades weak amid mixed cues; opens slightly lower at 85.66/$

Indian Rupee today: The domestic currency depreciated 2 paise to open at 85.66 against the dollar, after closing at 85.64 on Friday

The Indian Rupee traded slightly lower on Monday amid a weak dollar, as traders navigate through the surprise rate cuts by the Reserve Bank of India (RBI). 

 

The domestic currency depreciated 2 paise to open at 85.66 against the greenback, after closing at 85.64 on Friday, according to Bloomberg. The local unit has fallen by 0.06 per cent so far this month, while most Asian currencies gained. 

 

During the previous session, the currency witnessed high volatility, with the unit sliding to the 86 mark against the dollar. 

 

The Indian Rupee closed higher on Friday after the RBI delivered a 50 basis points Repo Rate cut and a 100 basis points Cash Reserve Ratio (CRR) cut, while shifting its policy stance from "Accommodative" to "Neutral", analysts noted.  The RBI may have intervened in the forex market on Friday, selling dollars after the rupee touched 85.95, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. 

 

Today, the rupee is expected to open slightly weaker at around 85.70, with an anticipated intraday range between 85.50 and 86.00, Bhansali said. "The RBI stated that it is not perturbed by the oversold position of its forward book, which saw a significant drop in April."  Track LIVE Stock Market Updates Here

 

Analysts at Nomura see limited support for the currency from a macro perspective due to continued downside growth challenges ahead, along with RBI rate cuts. "Overall, we still expect INR to underperform, and today’s actions and the policy/macro outlook do not change this view."

 

Markets found reassurance in the Governor's comments, allowing the rupee to appreciate at Friday’s close despite the rate cut, Bhansali said. "For now, the rupee appears to be range-bound between 85 and 86, with a potential breakout on either side depending on capital flows."

 

The dollar index remained weak after the US and China set to open their second round of trade talks Monday in London. Meanwhile, Beijing has already approved some rare-earth exports to the US, according to reports. The index, which measures the greenback against a basket of six major currencies, was down 0.20 per cent at 98.99.

 

In commodities, crude oil prices were trading flat as traders assessed the US-China trade talks. Brent crude price was down 0.15 per cent to $66.37 per barrel, while WTI crude prices were 0.15 per cent lower at 64.48, as of 9:08 AM IST.