Rupee Holds Firm Above 84 Mark As Outflow Woes Continue

The Indian rupee opened flat but above the Rs 84 mark against the US dollar on Monday as global funds extended their selling streak in domestic stocks.

The rupee opened flat at 84.07 against the dollar, according to Bloomberg data. The domestic currency had closed at 84.07 against the greenback on Friday.

In the last 15 sessions, foreign institutional investors have offloaded domestic stocks worth over Rs 91,200 crore, according to provisional data from the National Stock Exchange.

RBI intervention was evident from the significant drop in reserves, said Amit Pabari, Managing Director, CR Forex Advisors. India's foreign exchange reserves declined to $690 billion for the week ended Oct. 11, the biggest weekly fall since the week ended April 1, 2022.

Oil remained steady even as Israel vowed retaliation against Iran after it targeted the residence of Prime Minister Benjamin Netanyahu via a drone attack. This comes after Israel killed Hamas leader Yahya Sinwar.

As Israel intensifies its attacks, the rupee could come under pressure this week though RBI will be present all the time protecting, according to Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP. "Today the opening is flat with a bout of weakness to be seen."

Brent crude was trading 0.40% higher at $73.35 a barrel as of 9:14 a.m. The US Dollar Index was down 0.05% at $103.44.

The Dollar Index has the potential to rebound up to the 104 level, Pabari said. "However, looking further ahead, a correction below 100 seems likely as the Fed continues its rate-cutting cycle, shaping a more subdued medium- to long-term outlook for the index."

The Indian rupee may have been Asia’s worst-performing currency last quarter, but it is poised to be the most resilient to the dollar’s strength ahead of too-close-to-call US elections.