Rupee likely to ease marginally on higher oil, mixed cues

The Indian rupee is expected to open a tad weaker on a further rise in oil prices, while broader markets made slight gains on China easing Covid rules even as cases there continued to rise.

The rupee was seen around 82.70-82.75 per dollar in early trades, as compared to its previous close of 82.65.

A lack of dollar buyers and inflows in the latter half of the session on Monday helped the currency post a small gain and mark its best intraday percentage rise in two weeks.

The rupee could open near similar levels as its previous close, but mixed global cues and a lack of domestic triggers will likely keep it under pressure, said a foreign exchange trader.

Oil prices heading towards $85 per barrel was also a threat, the trader added. Higher oil prices hurt countries like India, where crude constitutes the bulk of the import bill.

The dollar index tripped, while most Asian currencies and stocks jumped as risk appetite grew after China said it will scrap its Covid quarantine rule for inbound travellers.

However, caution was warranted as cases in the country have continued to rise, while previous curbs keep hitting economic activity.

The rupee moved in narrow ranges over the past two weeks and struggled to sustain any gains.

Meanwhile, dollar offers around 82.85-82.90 kept it from depreciating sharply, with some traders saying the Reserve Bank of India was keeping it from falling past 83 per dollar.

"Exporters to continue selling USD/INR near 82.85-82.90 levels while importers may buy dips to hedge their near term payables and wait for better levels for January payables," said Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors.