Rupee trades flat as high oil prices offset RBI support

Indian rupee holds steady against dollar; RBI push mitigates impact of high crude. The Indian rupee held on to small gains in early trade on Monday as support from the Reserve Bank of India, traders said, negated pressure stemming from higher crude oil prices, Reuters reports.

The Indian rupee was at 95.6675 to the dollar, little changed from 95.6950 at the close of trading, with it largely trading within a tight band amid conflicting market forces. Higher crude oil prices continue to create dollar demand from importers.

Brent crude remained above $90 a barrel despite easing during Asian trading, with worries about potential U.S.

Sanctions on Iran, a major oil-producing nation, are keeping oil prices supported. State-run lenders were also seen as seen selling dollars, traders said, likely on account of the central bank (RBI).

Recently, the RBI increased dollar sales during Indian business hours, with increased levels of intervention aimed at reining in currency volatility and propping up the rupee as higher oil prices and global bond yields rise.

Movement of the Indian rupee has been supported by the RBI’s intervention to discourage speculative trades, according to currency traders.

Yesterday, the Indian rupee fell 0.3 per cent during the week and closed Friday at $95.6950 per dollar.

Currency traders will be monitoring crude oil prices, corporate forex flows and dollar-rupee derivative expirations later this day to determine direction.