Rupee began the week on a cautious note, struggling to move away from the 96-per-dollar level, as high crude oil prices and continued foreign fund selling keeping the currency under pressure. On Monday, rupee opened at 96.20 against the US dollar before weakening to 96.26, down 1 paisa from its previous close.The Reserve Bank of India (RBI) has been stepping in periodically to limit excessive intraday swings, forex traders said. However, higher import bills and sustained strength in the greenback continued to weigh on sentiment.The rupee’s latest move follows a sharp fall on Thursday, when it closed at 96.25 per US dollar after slipping below the psychologically important 96 level. Currency and equity markets were shut on Friday for Mahatma Gandhi Jayanti.“The rupee closed at its weakest in over two months, and carries an upward bias for the pair within 95.50–96.50 on oil above $100, US yields at multi-year highs and heavy foreign portfolio selling,” said Anindya Banerjee, Head of Commodity and Currency Research, Kotak Securities.The scale of the RBI’s intervention can be seen in the country’s foreign exchange reserves, which fell by $18 billion to $748 billion. Official data released on Friday showed reserves had dropped $18.343 billion to $747.557 billion in the week ended September 25. This followed a decline of $14.881 billion to $765.901 billion in the previous reporting week.The RBI’s monetary policy committee is also scheduled to meet this week, with most economists expecting a 25 basis point rate increase to 5.50 per cent.Markets are now watching several developments for their potential impact on the USD/INR pair. These include US services data, the Federal Reserve minutes and the RBI’s policy decision on Wednesday, besides any confirmation from Saudi Arabia on weekend damage.Banerjee said a Fed decision to remain on hold in October and an RBI hike are already priced in. However, confirmed damage to Saudi infrastructure is not priced in and could push Brent towards the upper end of its range quickly, he added.The dollar index was at 102.47, up 0.54 per cent. Brent crude futures, meanwhile, were trading 0.89 per cent lower at $101.34 a barrel.“Though we wait for RBI action on rupee, as dollar buying by oil companies will continue while FPIs will continue to remain in sell mode…,” said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP.Foreign selling remained another pressure point for the currency. Foreign Institutional Investors offloaded equities worth Rs 9,484.22 crore on a net basis on Thursday, according to exchange data.Dalal Street, however, began Monday’s session on a positive note. BSE Sensex rose 413 points to 72,315, while NSE Nifty gained 131.55 points to trade at 22,554.20 in early trade.
