By Nimesh Vora
MUMBAI (Reuters) -The Indian rupee rose on Monday with support from state-run banks — likely on behalf of the Reserve Bank of India — reinforcing expectations that the central bank will not want the currency to slip beyond the 88 level.
The rupee opened marginally higher at 87.9350 and extended its advance to last trade at 87.78 to the U.S. dollar, up from 87.9750 on Friday.
Traders said state-run banks were largely behind the post-open lift.
“There is this sense that the RBI won’t want to let it slip past 88 just yet — to validate the heavy intervention we saw last week,” a currency trader at a private sector bank said.
The RBI had stepped in aggressively last week, conducting pre-market interventions on at least two occasions to stem the rupee’s slide past record lows.
Dollar sales from the central bank triggered a pullback in USD/INR, flushing out speculative long positions and improving the near-term outlook for the rupee.
The RBI has helped anchor sentiment, though corporate dollar demand has capped rupee’s rally.
Meanwhile, equity flows have turned supportive for the rupee, with overseas investors net buyers of over $1 billion over the past week.
“The equity inflows are definitely helping sentiment, at least at the margin, especially when you combine it with what RBI is doing,” the currency trader said.
There was little market reaction to U.S. President Donald Trump’s comments on Sunday, when he reiterated that Indian Prime Minister Narendra Modi had assured him India would halt Russian oil imports. Trump also warned that New Delhi would face “massive” tariffs if it failed to comply.
(Reporting by Nimesh Vora; Editing by Ronojoy Mazumdar and Harikrishnan Nair)
