The RBI set the reference rate for USD/INR at 74.20 levels

Abhishek Goenka IFA Global

The Indian rupee made a flat opening at 74.25 levels and traded in the range of 74.19-74.27 with a sideways bias. The pair finally closed the day at day's low of 74.19 levels. The rupee recovered its losses and was steady against the dollar after banks likely sold the greenback due to the expiry of the June futures contracts today. Earlier in the day, the Indian unit was a tad down as oil importers purchased the greenback after noting elevated Brent crude prices.

The price of Brent crude oil futures for September delivery rose to as much as $75.77 a barrel on the Intercontinental Exchange earlier today, as compared to $75.38 a bbl at close on Friday. Higher crude prices increase the value of India's import bill, thereby worsening the nation's current account deficit. This in turn weighed on the rupee. Overnight Indexed Swap rates ended higher today tracking a rise in crude oil prices and US Treasury yields, which prompted traders to pay fixed rates.

The one-year swap rate ended at 3.96% against 3.93% on Friday, and the five-year OIS rate settled at 5.47% versus the previous close of 5.43%. The RBI set the reference rate for USDINR at 74.20 levels. The 1-year dollar/rupee forwards premium closed at 4.39% as against the 4.37% recorded in the previous day. According to a Reuters poll, Chinese factory activity likely expanded at a slower pace in June, hit by a resurgence of COVID-19 cases in the major export province of Guangdong, though quick containment indicates economic disruption is easing.

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Abhishek Goenka

IFA Global

Mr. Abhishek Goenka is the Founder and CEO of IFA Global. He pilots the IFA Global strategic direction with a focus on relentlessly improving the existing offerings while constantly searching for the next generation of business excellence.

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