India Rupee-Rupee in Narrow Range After Higher Open, RBI Support Meets Importer Demand

Mumbai: The rupee traded in a narrow range on Wednesday after opening higher, with continued support from the Reserve Bank of India offsetting steady dollar demand from importers.

The rupee opened at 94.89 to the U.S. dollar, having settled at 94.95 on Tuesday. The RBI likely stepped in with dollar sales before the market opened, traders said.

Market participants had expected the local currency to face pressure from higher oil prices and rising U.S. Treasury yields, with indications pointing to rupee slipping past the 95 per dollar level.  

Instead, the central bank's intervention helped keep the rupee away from that mark. Following the open, the rupee has remained largely rangebound with RBI dollar sales on one side and hedging by importers and worries over oil prices on the other, bankers said.

The rupee has drawn sustained support from stepped-up RBI intervention over the past several sessions. In the past two days, central bank dollar sales alongside flows routed through foreign banks have helped lift the currency despite twin headwinds of higher oil prices and rising U.S. Treasury yields.

The RBI has been supplying dollars to curb volatility, with the rupee expected to remain in the 94.50-95.50 range as long as Brent crude stays below $100 a barrel, said Alok Singh, head of treasury at CSB Bank in Mumbai.

A sustained break above $100, however, could trigger renewed downside pressure on the rupee and put the 96-per-dollar mark in play, he added.

Renewed fighting between the U.S. and Iran rattled markets, sending Brent crude to $95.60 per barrel, with traders pricing in a higher risk of disruption to Middle East energy supplies.

The jump in oil fanned inflation concerns, driving U.S. Treasury yields to their highest levels since late 2023.