Indian rupee ends marginally higher in subdued trade, forward premiums ease

The Indian rupee finished Monday a touch firmer at 95.8150 per dollar, according to Business Recorder, compared with 95.8725 in the previous session. Support came from cheaper oil and foreign portfolio money, though steady dollar purchases by importers, including local refiners, limited the rise, traders said.

Elsewhere in the region, currencies traded within tight ranges while equities gained after oil fell 2%. Investors were encouraged by hopes for diplomatic progress over the Iran conflict ahead of this week's United Nations meeting and by a possible partial return of Saudi shipments. Inflows tied to the National Stock Exchange of India's public offering also aided the currency.

Forward premiums narrowed, with the August 2027 month-end contract sliding to 2.94 rupees after a 6 paisa drop as participants unwound older positions. Traders are betting on a near-term Reserve Bank of India rate hike, and one state-run bank dealer warned that premiums would drop sharply without it. Following the Fed's rate increase last week, ING anticipates December hikes from the ECB and the Fed, while CME FedWatch puts the odds of an October Fed rate hike at 55%, up from 42.5% a week earlier.