Rupee extends volatile trade on strong dollar; opens flat at 88.76/$

Indian Rupee today: The domestic currency opened one paise higher at 88.76 against the greenback on Monday

The Indian rupee continued to trade under pressure and opened flat on Monday, with analysts closely watching trade deals and the central bank interventions. 

 

The domestic currency opened one paise higher at 88.76 against the greenback on Monday, according to Bloomberg. The currency has risen 0.02 per cent in October, snapping a five-month losing streak. 

 

In the near term, the rupee may continue to trade under mild pressure, moving within a range of 88.50-89.10 as global dollar strength persists and markets await concrete progress on the India-US trade deal, Amit Pabari, managing director of CR Forex Advisors, said. "However, once the deal is finalised and the pair breaks below the crucial support of 88.40, momentum could shift quickly, with the rupee likely to appreciate toward 87.70-87.50 levels."

 

   

While the external environment remains challenging, the Reserve Bank of India (RBI) has shown it is not backing away from defending the currency, Pabari said. "The central bank’s actions show that stabilising the rupee remains a top priority."

 

The dollar index pared some gains after the Federal Reserve’s cautious tone on future rate cuts, while optimism over improving US-China trade relations also helped lift sentiment toward the currency. The measure of the greenback against a basket of six major currencies was down 0.04 per cent at 99.76.

 

Analysts noted that the markets trimmed their expectations for another Fed cut in December, with the probability dropping to 65 per cent from 92 per cent a week ago, according to CME’s FedWatch Tool.

 

Market participants await PMI data from various countries, as well as what the central bank does to protect the currency or allows the depreciation to continue, Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said. 

 

"We believe the Dollar is rangebound overall against majors. We don't see this week's Dollar strength as a reversal. Market will test RBI's resolve to defend the Rupee," IFA Global said in a report. "It will be interesting to see if the RBI continues to defend 88.80 resolutely or chooses to leave some powder dry in case the Rupee weakens further."

 

In commodities, crude oil prices rose after Opec+ decided to pause output increases during the first quarter. Brent crude price was up 0.37 per cent at 65.01 per barrel, while WTI crude prices were higher by 0.38 per cent at 61.19 per barrel, as of 8:55 AM IST.