Indian rupee ends flat, anchored by RBI intervention in face of global strains

The Indian rupee closed almost unchanged on Monday at 96.2925 per dollar, compared with 96.3150 in the previous session, as the currency was held in a narrow band. Business Recorder reported that the currency was caught between a stronger greenback, costlier crude and probable central bank support. The dollar hovered close to a 17-month peak, helped by the euro's weakness over France's public finances.

Crude oil moved up to almost $103 a barrel, and although Middle Eastern shipments have risen, ongoing war-related disruption keeps prices high, a constant risk for India's import-reliant economy. Importers have locked in far more forward hedges than exporters, with $576.6 billion booked from January to September against $305.6 billion by exporters, according to clearing house data. That imbalance, together with the central bank's repeated interventions, has kept the rupee from testing the record lows seen in May.

Attention now turns to the RBI's policy decision on Wednesday, where a 25 basis point rate increase is widely expected. ING's Deepali Bhargava said that, although the inflation shock is mostly supply-driven, the central bank is expected to hike to stop inflation expectations drifting, and markets will watch guidance on how long tightening lasts. Finance Minister Nirmala Sitharaman also said trade talks with the United States have plateaued, making further concessions harder.