Rupee Closes Flat Against US Dollar After Strong Opening

The Indian rupee ended the day flat at 85.54 against the US dollar on Monday, following a volatile trading session last Friday. The domestic currency had opened at 85.48, showing a gain of 6 paise from its previous close of 85.54.

On Friday, the rupee had hit a new all-time low of 85.81 before recovering marginally, marking its sharpest single-day decline since February 2023. The significant drop in the rupee's value was driven by month-end dollar demand, particularly from oil importers, as well as the global strength of the greenback.

Despite the sharp fluctuations, the rupee has depreciated by 2.9% so far this year, making it one of the less volatile currencies in Asia, compared to the Japanese yen and South Korean won, which have seen declines of 10% and 12%, respectively.

Experts like Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors, advised exporters to hold off on transactions with a stop-loss set at 85.15, as the rupee faces persistent pressure due to ongoing dollar demand. On the other hand, Bhansali recommended that importers consider buying rupees on dips, as the currency remains in a weakening trend.

Friday’s volatility was also partly attributed to the Reserve Bank of India's intervention to stabilise the rupee after it had dropped significantly. The RBI sold dollars in the market to cover oversold positions, ensuring the currency closed at 85.5325 against the dollar. With a more stable outlook for the current account deficit, experts expect the rupee to open around 85.41 and fluctuate within the range of 85.30 to 85.60 in the near term.