Rupee likely to commence weekly trade with weaker note despite dollar subdued ahead with U.S. Federal Reserve officials scheduled to speak later in the week and a decision on the inclusion of Chinese government bonds in the FTSE Russell World Government Bond Index (RWGBI).
The RBI appears to be following a strategy of allowing the rupee to firm up in order to keep inflation under check, according to a report by Bank of America Securities. rupee has gained 2.7% against the dollar and the central bank might be less aggressive in buying dollars as it has achieved adequacy of foreign exchange reserves, the report said.
On Friday as weakness in the dollar index overseas and positive domestic equities buoyed investors' sentiment. At the interbank forex market, the rupee opened at 73.4750 against greenback, and gained further to 73.33, registering a rise of 33 pips over its previous close. On Thursday, the rupee had depreciated by 14 pips to end at 73.66 against the US dollar.
INTRADAY RANGE - 72.92 ( 73.31 - 73.69 ) 74.08
GLOBAL OUTLOOK
In a world where real rate differentials increasingly drive capital flows, in developed market, FX Japan has the highest and positive real yields, and even more so when adjusting for hedging costs.
This makes the JPY very attractive, especially against the GBP and USD, where real rates are not just negative but in the case of the Fed, they are actively seeking lower rates out.
Coronavirus cases have now surpassed 30 million, casting a gloomy pall over prospects of a V-shaped economic recovery.
European countries from Denmark to Greece announced new restrictions on Friday to curb surging coronavirus infections in some of their largest cities, while Britain was reported to be considering a new national lockdown.
The dollar weakness may signal more volatility ahead of the Nov. 3 U.S. elections where Republican President Donald Trump will face off against Democratic challenger Joe Biden.
Oil prices edged higher on Monday as a tropical storm took aim for the U.S. Gulf of Mexico region halting some production, though price gains were capped by the potential return of oil output in Libya and a continued rise in coronavirus cases.
Oil and gas producers had been restarting their offshore operations over the weekend after being disrupted by Sally. Some 17% of U.S. Gulf of Mexico offshore oil production and nearly 13% of natural gas output went offline on Saturday in the face of Hurricane Sally's waves and winds.
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