Rupee rises on likely IPO-related foreign inflows; opens higher at 88.75/$

The Indian Rupee traded higher on Monday as traders expect positive momentum from likely foreign inflows in equity markets with major initial public offerings (IPOs) in the pipeline. 

 

The domestic currency opened three paise higher at 88.75 against the greenback on Monday, according to Bloomberg. The currency fell 3.70 per cent so far this year, while it hit an all-time low of 88.80 last week.

 

Tata Capital is poised to start taking orders for an IPO on Monday that may raise as much as ₹15,511.90 crore, the biggest deal in the non-banking financial sector this year. The Tata company's offering will be followed by LG Electronics Inc.’s Indian unit in another billion-dollar IPO launch the next day, which will raise ₹11,600 crore. 

 

   

The primary market is set for a busy week, with traders gearing up to launch IPOs, collectively worth more than ₹27,000 crore.

 

Over the past year, the rupee has weakened by more than 5 per cent, pressured by US policy moves, trade tensions and global uncertainties, Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said. 

 

The outlook for the dollar looks bullish, and it is a matter of time before the Reserve Bank of India (RBI) stops pursuing the level of 88.80 and leaves it for the currency pair to head higher, Bhansali said. "The ongoing US-India trade tensions have been weighing on the rupee and shall continue to weigh till a solution is arrived at."

 

RBI's dovish commentary on future rate cuts in its meeting held in latest meeting is also keeping the rupee lower, analysts said. RBI Governor Sanjay Malhotra kept repo rates unchanged and maintained the policy stance at ‘neutral’. In the post-policy press conference, the Governor said that the RBI does not target any specific rupee level and the efforts have been focused on managing undue volatility.

 

Meanwhile, the dollar index traded higher as uncertainties around the US government shutdown increased. The measure of the greenback against a basket of six major currencies was up 0.30 per cent at 98.01.

 

In commodities, crude oil prices rose as Israel and Hamas are set to meet in Egypt to discuss a possible swap of Israeli hostages for Palestinian prisoners. Brent crude price was up 1.36 per cent at 65.41 per barrel, while WTI crude prices were higher by 1.43 per cent at 61.75 per barrel, as of 9:15 AM IST.