However, traders pointed to the Reserve Bank of India’s continued presence around the 92.50 level, which is likely to limit sharp depreciation and curb speculative moves unless supported by strong underlying demand for dollars.
The rupee has hovered close to the 92.50 mark over the past three sessions, with central bank intervention helping prevent a decisive breach. Analysts said the currency remains vulnerable amid a combination of equity outflows, increased corporate hedging due to elevated oil prices, and speculative positioning against the rupee.Foreign investors have pulled out more than $8 billion from Indian equities since the onset of the Iran conflict, contributing to a decline of over 6% in the benchmark Nifty 50 so far this month.
Global cues also remain in focus, with the Federal Reserve set to announce its policy decision later in the day. Economists widely expect the US central bank to keep interest rates unchanged. However, expectations of rate cuts have moderated, with markets now pricing in around 25 basis points of easing this year, down from more than 50 basis points earlier.
Investors will closely watch the Fed’s updated projections for signals on inflation and growth. Analysts expect forecasts to reflect higher inflation and softer growth, while indicating that policymakers may look through oil-driven price pressures.
–With Reuters inputs
