The Indian rupee hovered around 95.2 per dollar, stabilizing after recent multi-week lows as investors weighed persistent dollar demand, Reserve Bank of India intervention, and broader weakness across Asian currencies. Sentiment toward the rupee deteriorated following a nearly 1% decline last week, driven by arbitrage-related outflows, routine importer demand for US dollars, and a stronger greenback amid expectations that the Federal Reserve will keep interest rates elevated for an extended period.
Although the dollar softened after a weaker-than-expected June US employment report, traders anticipate only limited upside for the rupee. Lower crude oil prices have provided some support, but sustained dollar demand has capped the currency’s recovery, even as the central bank continues to intervene through dollar sales to smooth volatility. Globally, market focus is trained on the Fed’s latest meeting minutes and the upcoming US inflation data, both seen as key to shaping interest rate expectations and the dollar’s trajectory.
