Rupee Set to Stay Rangebound as Inflows Offset Month-End Pressure
The Indian rupee is expected to remain largely rangebound this week as strong capital inflows and measures supporting the country’s balance of payments provide a cushion against month-end demand for dollars. The rupee closed at 95.6950 per dollar on Friday, down around 0.3% for the week, with intervention by the Reserve Bank of India helping limit losses.
Month-end derivative maturities and corporate dollar payments could put pressure on the currency, while elevated oil prices linked to the Iran conflict remain a key concern. The RBI said it had attracted nearly $73 billion through measures introduced in June, strengthening foreign exchange reserves and giving it greater capacity to support the rupee. Meanwhile, government bonds are expected to trade in a narrow range, with the 10-year yield recently rising to 6.8495%.
Bond markets will closely track crude prices, U.S. Treasury yields and signals from the RBI and Federal Reserve. Brent crude rose nearly 7% last week to around $94 a barrel, raising concerns over inflation. Investors will also watch upcoming U.S. economic data and India’s July industrial output figures, due later this week.
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