Noida, Apr 6 (APAC Media): The Indian rupee closed almost flat on Monday, as competing market pressures kept its movement in check. Although the currency saw initial gains, they were offset by strong dollar demand from importers and adjustments in trading positions within the foreign exchange market.
The rupee settled near 93.06 against the U.S. dollar, marking a marginal gain from its previous close after trading in a tight range throughout the session. Early support was driven by the unwinding of speculative bets and recent steps taken by the Reserve Bank of India (RBI) to rein in excessive activity in the foreign exchange market.
However, the upside was limited as importers hurried to hedge their dollar exposures, capitalising on the rupee’s recent strengthening. This spike in hedging activity lifted forward premiums and sustained demand for the U.S. currency in the market.
Market participants noted that the RBI’s tightening of rules, such as restrictions on rebooking cancelled contracts and limits on speculative positions, has significantly altered trading dynamics.
While these measures triggered an unwinding of arbitrage trades, they also encouraged genuine hedging activity from importers, which offset any downward pressure on the dollar.
Additionally, global factors also continued to shape market sentiment. Persistent geopolitical tensions in the Middle East, along with high crude oil prices, have kept the rupee’s outlook cautious, as rising oil costs push up India’s import bill and boost demand for dollars.
Liquidity in the forward market remained constrained, intensifying the effect of hedging demand. Traders noted that the migration of offshore positions to onshore markets added further volatility to premiums and yields.
Overall, the rupee’s subdued close highlights a market balancing supportive domestic policies against ongoing external pressures.
Analysts expect the currency to trade within a narrow range in the near term, with attention turning to upcoming RBI policy cues and global developments that may affect capital flows and oil prices.
News Agency Inputs
