Rupee Holds Firm Beyond Rs 84 As RBI Dollar Selling Resists FPI Outflows

The Indian rupee opened little changed but remained firm beyond the Rs 84 mark on continued foreign fund outflow from domestic bonds and equities. However, relentless dollar selling by state-run banks on behalf of the Reserve Bank of India kept the depreciation of the rupee in check.

The domestic currency opened little changed at Rs 84.07 against the US dollar, according to Bloomberg data. The rupee closed at Rs 84.06 on Monday against the greenback.

Foreign investors sold Indian stocks for the 11th consecutive day due to the revival of Chinese stocks and concerns about valuation. In the last eleven sessions, FIIs have offloaded domestic stocks worth over Rs 73,100 crore, according to the provisional data from NSE. During the same period, domestic investors mopped up stocks worth Rs 73,600 crore.

Following their addition to JPMorgan Chase & Co.'s emerging-market bond index, Indian sovereign bonds eligible for global debt inclusion experienced their first weekly outflow.

The Indian rupee was stable yesterday as RBI supported it near Rs 84.08 levels, but the dollar bids from FPIs and oil companies do not seem to end to give relief, Anil Kumar Bhansali, head of Treasury and executive director at Finrex Treasury Advisors LLP, said.

The US dollar index, rebounding towards 103 levels after earlier weakness, has piled even more pressure on the rupee, according to Amit Pabari, managing director of CR Forex Advisors. "All these elements have come together to drag the rupee to its recent lows."

However, with the right mix of RBI interventions and favourable global trends, the rupee could inch back to Rs 83.80, marking the beginning of a slow but steady recovery, he said.