The Indian rupee closed slightly weaker on Monday but outperformed Asian currencies, which fell after U.S. 10-year Treasury yields rose on Friday, while the dollar showed resilience despite weaker U.S. economic data last week.
The rupee settled at 82.7475, little changed from 82.7150 in the previous session. Asian currencies weakened against the dollar, led by the Thai baht and Malaysian ringgit.
A foreign exchange trader at a state-owned bank said regular inflows helped the rupee strengthen amid thin U.S. holiday trading.
A lack of demand for U.S. dollar cash due to the U.S. Labor Day holiday on Monday also contributed to quiet trading in the local currency, traders added.
The dollar index rallied to 104.26 on Friday before retreating to 104.11.
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ING Bank said in a note, “We do not think the strength of the US dollar will be challenged this week, and the US dollar index may rise slightly to the 104.50-70 area.”
Still, higher crude prices could weigh on the rupee. Brent crude futures hit their highest in more than six months on Friday at $88.43.
“If crude oil prices are not at this level, the rupee could move closer to 82.00,” said Sajal Gupta, head of foreign exchange and rates at Edelweiss Financial Services.
India’s imports of discounted crude from Russia fell to a seven-month low in August, while imports from Saudi Arabia rose.