The Indian rupee weakened by 10 paise to close at a record low of 85.12 against the US dollar on Monday.
The domestic currency had opened at 84.85, according to Bloomberg data. It had closed at 85.02 on Friday.
Brent crude rose 0.41% to $73.24 per barrel, supported by easing concerns over a potential US government shutdown and a softer US Personal Consumption Expenditures price index, which boosted hopes for further policy easing by the US Federal Reserve, said Anil Bhansali, executive director at Finrex Treasury Advisors LLP.
Meanwhile, the dollar index gained 0.12% to 85.1187, maintaining its upward momentum.
Bhansali said exporters may hold back on selling dollars with a stop loss at 84.90, given the persistent demand for the US dollar. Importers, on the other hand, are advised to use any dips in the rupee's value to meet their dollar requirements.
Amit Pabari, managing director at CR Forex Advisors, highlighted that the Fed's recent stance, signalling only two rate cuts in 2025 instead of the previously projected four, has kept the dollar index elevated, breaching the 108 mark. This has added pressure on emerging market currencies, including the rupee.
Domestically, the rupee came under further strain as foreign portfolio investors continued to offload equities. However, Pabari added that the upcoming Sensex reshuffle, with Zomato's inclusion expected to attract net inflows of $260 million, might offer temporary relief to the currency.
India’s forex reserves have also dropped to a six-month low, reflecting the Reserve Bank of India's interventions to manage sharp depreciation in the rupee.
Looking ahead, the dollar-rupee pair is expected to trade within a range of 84.90 to 85.10, according to Bhansali.
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