The Indian rupee opened flat at 84.85 against the US dollar on Monday, unchanged from Friday's closing level, according to Bloomberg data.
Brent crude climbed 0.47% to $73.28 per barrel, supported by easing concerns over a potential US government shutdown and a softer US Personal Consumption Expenditures price index, which raised hopes for further policy easing by the Federal Reserve, according to Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
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Meanwhile, the dollar index edged higher by 0.09% to 107.714, reflecting continued strength in the greenback.
Exporters may consider holding back with a stop loss at 84.90 as the rupee remains under pressure due to sustained dollar demand, Bhansali advised. Importers, on the other hand, are advised to take advantage of any dips to secure their dollar requirements.
According to Amit Pabari, managing director at CR Forex Advisors, the hawkish stance adopted by the Federal Reserve, signalling only two rate cuts in 2025 instead of the earlier projected four, has kept the dollar index elevated, breaching the 108 mark. This has created persistent headwinds for emerging market currencies, including the rupee, he said.
On the domestic front, the USD-INR pair breached the 85 mark last week amid the Fed's cautious outlook, coupled with significant foreign portfolio investor outflows. However, the upcoming Sensex reshuffle with Zomato's inclusion expected to attract net inflows of $260 million, could offer some temporary support to the rupee, said Pabari.
Additionally, India's forex reserves have slipped to a six-month low, reflecting the Reserve Bank of India's timely interventions to curb sharp depreciation of the rupee.
Looking ahead, the dollar-rupee pair is expected to trade within a narrow range of 84.90 to 85.10 during the day, according to Bhansali.
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