Mumbai | The rupee depreciated 5 paise to close at 96.30 (provisional) against the US dollar on Monday, as elevated oil prices and persistent foreign fund outflows kept the Indian currency range-bound near the critical 96 level against the US dollar.
Forex traders said a boost in risk-on sentiment supported the rupee, though traders are now turning their attention towards foreign capital flows and the Reserve Bank of India's upcoming monetary policy decision for further cues.
At the interbank foreign exchange market, the rupee opened at 96.20, then lost ground to touch an intraday low of 96.31 against the American currency. At the end of Monday's trading session, the domestic unit was quoted at 96.30 (provisional) against the greenback, lower by 5 paise over its previous close.
On Thursday, the rupee slumped below the psychologically important 96 per dollar mark to close at 96.25 against the US dollar.
Forex and equity markets were closed on Friday on account of Mahatma Gandhi Jayanti.
"Improving risk-on sentiment provided an additional cushion for the local currency, though all eyes will now be on the RBI's monetary policy decision and foreign capital flows. Looking ahead, spot USDINR is expected to consolidate between 95.95 and 96.50 in the near term, with a bias toward further gains," said Dilip Parmar, Research Analyst, HDFC Securities.
The Reserve Bank's Monetary Policy Committee began its three-day meeting on Monday and is likely to raise rates by 25 basis points, aligning with the central banks' hawkish stance amid escalating conflict in West Asia that poses risks for domestic inflation.
The last repo rate hike was in February 2023, when the RBI raised the rate by 0.25 per cent to 6.50 per cent. It kept the rate unchanged through 2023-24 before beginning its rate-cut cycle in 2025. Currently, the RBI's policy repo rate stands at 5.25 per cent.
Meanwhile, the dollar index, which gauges the strength of the greenback against a basket of six currencies, was trading at 102.18, higher by 0.25 per cent.
Brent crude, the global oil benchmark, was trading higher by 0.22 per cent at USD 102.48 per barrel in futures trade.
On the domestic equity market front, Sensex jumped 472.77 points to settle at 72,382.47, while the Nifty climbed 133.80 points to 22,555.75.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 9,484.22 crore on a net basis on Thursday, according to exchange data.
Meanwhile, India's forex reserves dropped USD 18.343 billion to USD 747.557 billion during the week ended September 25, the Reserve Bank said on Friday.
In the previous reporting week, the kitty had declined USD 14.881 billion to USD 765.901 billion.
