Rupee poised for subdued start as traders watch oil prices, IPO-linked flows

The Indian rupee is expected to make a quiet start on ​Monday, with traders watching oil prices and foreign portfolio flows ‌for directional cues while holding on to expectations ​that central bank intervention will limit the ⁠currency's weakness.

The rupee is expected to open in the 95.90-95.95 band, traders said, marginally weaker than its close at ‌95.8725 on Friday.

Oil prices slipped on Monday but held above $100 as Iran and the United States ‌exchanged new threats while investors assessed the recovery ‌in ⁠energy shipments from Saudi Arabia. Brent ⁠prices were down 2 per cent at $101.7 per barrel.

Hopes of a diplomatic solution to the Iran war amid the UN meet this week also ​helped cool prices.

"Although elevated ‌oil prices may keep the current account under pressure, we think that the improved capital flow dynamics should keep USD/INR within the 95-97 range," Goldman ‌Sachs said in a note.

The central bank's capital ​inflow measures, which included sops for raising overseas FX deposits and borrowings, have helped lift ⁠India's FX reserves to about $781 billion — granting the central bank firepower to fund the current account gap ‌and limit rupee depreciation.

"Even if the broad USD rebounds, the RBI has demonstrated that it has plenty of tools to cap the upside in USD/INR, bearing in mind that it has not begun to hike policy rates yet," the note added.

Expectations of foreign ‌portfolio flows linked to a large domestic IPO could also offer ​support to the rupee on Monday, traders said.

The National Stock Exchange of India's $2.3 billion ⁠IPO was fully subscribed on Friday and analysts expect the ⁠demand, especially from foreign institutional investors, to persist on Monday.

Regional currencies were mostly range-bound while share markets ‌edged higher as AI's insatiable demand for data buoyed chipmakers. Futures markets, though, pointed to a ​quiet start for equities in Mumbai.

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