The U.S. dollar held near an 18-month high on Monday as investors waited for U.S. inflation data. The Indian rupee gained after the Reserve Bank of India announced measures to curb dollar demand.
The U.S. dollar held near an 18-month high on Monday as investors awaited U.S. inflation data later this week. The rupee, meanwhile, gained sharply after the Reserve Bank of India unveiled a broad package of measures.
The US Dollar Index was steady at 102.18 by 02:57 ET, remaining near last week's peak of 102.54.
Middle East tensions underpin the dollar
The dollar's resilience was underpinned by heightened geopolitical tensions in the Middle East, where attacks by Yemen's Iran-backed Houthi militants on Saudi Arabia and strikes on tankers over the weekend raised concerns about further disruptions to energy supplies.
Investors are looking to Wednesday's U.S. consumer price index report for clues on the Federal Reserve's next policy move. Markets were pricing in an 81% probability of a hold, compared with 51% a month earlier, according to CME FedWatch data.
RBI moves push USD/INR lower
The Indian rupee's USD/INR pair fell as much as 1.1% to 95.739 rupees, and it last traded 0.7% lower at 96.123. The RBI introduced the measures over the weekend to curb dollar demand and speculative trading.
The central bank barred the rebooking of cancelled rupee-linked foreign-exchange derivative contracts, tightened rules on transactions without underlying exposure and required banks to set aside cash against certain contracts. It also opened a special window allowing state-run oil marketing companies to buy dollars directly from the central bank, reducing their demand in the spot market.
According to MUFG analysts, "the central bank continues to support the rupee".
Elsewhere, the South Korean won's USD/KRW pair fell 0.6% to 1,332.58 won, its lowest since Oct. 2024.
Source: Investing.com
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