Indian Rupee Opens Flat Against US Dollar With Banks Cautious

The Indian rupee opened flat at 84.27 against the US dollar on Tuesday, after it ended stronger against the US dollar, appreciating by 17 paise to close at 84.28 on Monday. During the day, the currency rose by 19 paise, reaching 84.26, following a relatively stable start.

Earlier in the week, the rupee had opened on a positive note, strengthening by 8 paise against the US dollar to start Monday at 84.37. However, on Tuesday, the rupee was expected to open slightly weaker at 84.34, following a brief period of inflows that had helped the domestic currency close at 84.2875 on Monday.

Banks are becoming more cautious in their dealings with the rupee after the Reserve Bank of India issued warnings against speculative long positions, said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors. This caution could result in the rupee taking longer to reach the 84.50 mark, as banks proceed with more care.

On Friday, the rupee had faced pressure but managed to recover slightly by the close, appreciating by 5 paise to end at 84.45, after opening at 84.49. Earlier in the week, it hit a new record low of 84.50, weighed down by foreign investor outflows and rising geopolitical tensions.

Global funds offloaded Rs 5,321 crore worth of Indian equities on Thursday, pushing the net outflow tally to Rs 1.65 lakh crore over the past 37 sessions. In addition, the ongoing Russia-Ukraine conflict has further strained market sentiment and impacted global currencies, putting additional pressure on the rupee.

Despite these challenges, the Reserve Bank of India has actively intervened to stabilise the rupee, including measures in the Non-Deliverable Forward market, to sell dollars and support the domestic currency.

The rupee's range for the day is expected to be between 84.25 and 84.50, with an expected opening at 84.34, as per Bhansali.