The Indian rupee ended Monday at 95.30 per dollar, slipping from Friday's close of 95.2075, as RBI intervention through state-run banks offset upward pressure from firmer crude prices.
State-run banks offered dollars throughout the session in what traders attributed to RBI management of currency stability. The consistent selling has made traders reluctant to build fresh short positions against the rupee.
"The 96 level seems to be emerging as a hard line against rupee weakness," a trader at a private bank said, adding that the unit is likely to strengthen in the near term.
Rising oil prices added headwinds. Talks on reopening the Strait of Hormuz stalled after Iran insisted on specific U.S. concessions, keeping crude prices elevated and weighing on the import-heavy economy.
Analysts at ING hold a constructive view on the rupee, citing policy measures designed to attract dollar inflows. The firm forecasts appreciation to around 94.50 in three months and a further move to 94 in six months.
Elsewhere in Asia, the Indonesian rupiah gained 0.7 percent while the Korean won fell 0.7 percent. Regional equities largely posted gains; Indian stocks were nearly flat.
A Reuters poll of 40 economists forecasts India's annual CPI at 4.50 percent for July, up from 4.38 percent in June. A higher-than-expected reading could complicate the RBI's monetary policy calculus heading into its next rate decision.
