Rupee Rises 5 Paise to 95.82 Against Dollar as Oil Prices and Foreign Fund Flows Watched

The Indian rupee has surged in early trading Monday. Surpassing 95.82 against the US dollar, as domestic stocks kicked off with a positive note and foreign investors' sentiment improved.

Nevertheless, oil majors continue to draw down their greenback holdings, while the US Dollar Index's uptick has tempered the rupee's gains.

Industry experts attribute the initial gains to a combination of factors, including improved investor sentiment and increased foreign fund inflows. The Reserve Bank of India's intervention to limit sharp currency moves has also been seen as supporting the rupee's gains.

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Nevertheless, higher oil prices remain a concern for India, which can widen the country's import bill and put pressure on the current account and the rupee.

According to Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, the rupee is expected to trade within a broad range of 95.60–96.50, with the 96.40–96.50 zone acting as stiff resistance.

India's foreign exchange reserves have declined by USD 4.924 billion to USD 780.782 billion during the week ended September 11. Largely due to a decrease in foreign currency and gold reserves, as per data released by the RBI on Friday.

The Reserve Bank of India has taken steps to bolster the domestic currency. Amid growing pressure from importers seeking to purchase dollars for oil imports. And a strengthening US dollar Index that has been fueled by sustained market demand.

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Traders are closely monitoring the rupee's approach to the 96-per-dollar level, around which the RBI has been intervening in recent sessions. The rupee closed at 95.89 on Friday after being defended near 96 last week.

The rupee's performance is expected to be influenced by a range of factors. This includes oil prices, foreign portfolio flows, and the RBI's intervention in the foreign exchange market.

In the coming days, investors will be watching for any signs of further currency movements or changes in investor sentiment. The Reserve Bank of India's next move on the rupee is also expected to be closely watched by traders and investors alike.