Rupee ends flat as RBI steps in amid global headwinds

The Indian rupee closed little changed on Monday, ending at 96.2925 per dollar compared to 96.3150 in the previous session, as the Reserve Bank of India intervened to keep the currency within a narrow trading range amid multiple external pressures. The rupee remained wedged between a broadly firmer dollar hovering near a 17-month high, elevated crude oil prices near $103 per barrel, and persistent currency market headwinds.

The dollar's strength was fueled by euro weakness stemming from concerns over France's fiscal situation, which knocked Asian currencies between 0.1% to 0.5% lower. Oil prices, though supported by increased Middle Eastern exports, remained elevated due to ongoing war-related disruptions, adding inflationary risks to India's energy import-dependent economy. Beyond external factors, the rupee faced internal pressures from importers' hedging activity, with forward hedges totaling $576.6 billion between January and September significantly exceeding the $305.6 billion booked by exporters.

Finance Minister Nirmala Sitharaman noted on Monday that trade negotiations between India and the United States have reached a plateau with further concessions appearing difficult. Market attention now turns to the Reserve Bank of India's monetary policy decision on Wednesday, where participants widely expect a 25 basis point rate increase to counter inflationary pressures and prevent inflation expectations from destabilizing.