"Its just bewildering that the RBI (Reserve Bank of India) is determined to holding on to this level. While I can understand they do not want volatility, this is overdoing it."The Indian rupee is expected to open largely unchanged on Monday, buoyed by expectations of the country's central bank yet again stepping in to negate the impact of a stronger dollar and a rise U.S. Treasury yields.
The 1-month non-deliverable forward indicated that the rupee will open nearly flat from 84.08 in the previous session, hovering near a record low of 84.0825.
The rupee "barely moved, opening flat and then doing absolutely nothing" for the whole of last week, and "I do not see any reason why anything will be different (this week)", a forex trader at a bank said.
"Its just bewildering that the RBI (Reserve Bank of India) is determined to holding on to this level. While I can understand they do not want volatility, this is overdoing it."
The rupee all through last week was held in just a 3 paisa range amid the RBI's persistent intervention in the face of equity outflows and an upbeat dollar.
The dollar index rose 0.8% last week, notching its fourth weekly advance, boosted by the resilient U.S. economy and prospects of Donald Trump winning the U.S. presidential elections. The 10-year U.S. Treasury yield is at its highest since mid-July.
The dollar index rose more on Monday, largely on the back of the slump in the Japanese yen after the country's ruling coalition lost its parliamentary majority, which investors reckon would likely slow future interest rate hikes.
Meanwhile, in good news for the rupee, oil prices plunged after Israel's weekend strike on Iran bypassed oil or nuclear targets.
"Israel's attack on Iran on Saturday was limited to missile and air defence sites, and was more restrained than many expected," MUFG Bank said in a note.
