MUMBAI, Sept 7 (Reuters) - The Indian rupee traded in a narrow range on Monday, wedged between sustained market intervention by the Reserve Bank of India and a rise in oil prices as strikes on vessels sailing through the Strait of Hormuz stoked worries over energy flows.
The rupee closed at 94.4850 per dollar, unchanged from its closing level on Friday. The currency spent the session in about a 10-paisa trading range with bankers pointing to consistent dollar sales from state-run banks, most likely on behalf of the RBI.
The intervention echoed the pattern traders have seen over the last two weeks, where consistent central bank dollar selling anchored the rupee. Bankers estimate that the RBI sold at least $8 billion to bolster the rupee last week.
The dollar sales have helped the rupee hold its ground even as oil prices continue to linger near 6-week highs. Brent crude oil futures were last at $96.6 per barrel. Goldman Sachs sees them rising to as much as $120 per barrel if attacks on shipping increase.
Iran said it will announce a new restricted zone in the Persian Gulf in the coming days, along with maps of a new shipping corridor through the Strait of Hormuz.
Analysts at ING reckon that higher energy prices and limited current market pricing of interest rate hikes by the Federal Reserve could lend some support to the dollar in the near term.
Traders have priced in a roughly 57% chance the Federal Reserve will hike rates this month , following stronger-than-expected labour market data. Market focus now turns to inflation data on Friday.
On the day, the dollar index was down 0.2% to 98.9 while Asian currencies traded mixed. Indian stocks fell 0.6% even as MSCI's gauge of Asian stocks jumped nearly 2%, boosted by a rise in stocks linked to the artificial intelligence theme.
Reporting by Jaspreet Kalra; Editing by Jochelle Mendonca, Harikrishnan Nair and Ronojoy Mazumdar
Source: Reuters