The presence of state-run banks curbed weakening in the local currency. Still, consistent interbank dollar bids dampened positive signals from increased risk appetite worldwide, causing the Indian rupee to move in a narrow band on Monday. The rupee was almost steady from its finish of 88.66 in the previous session, closing at 88.6750 against the US dollar.
Asian currencies appreciated relative to the US dollar, while regional stocks increased due to the hope that the US federal government shutdown could soon be lifted. The US Senate advanced a bill to reopen the federal government on Sunday. The BSE Sensex and Nifty 50, India’s equity indices, both increased by roughly 0.3%, while MSCI’s measure of Asian shares outside of Japan increased by 1%.
Even while numerous market interventions since late September have helped the rupee maintain above its record low of 88.80, the enhanced risk appetite did little to boost the currency, which has been hindered by continuing local corporate dollar demand and modest foreign portfolio inflows.
So far in November, foreign investors have sold almost $1.5 billion worth of Indian stocks, bringing the total outflow for the year to $17.4 billion. The central bank was probably intervening sporadically to boost the rupee on Monday as well, two traders noted.
