CURRENCY OVERVIEW

The Indian rupee ended marginally stronger on Monday after hovering in a narrow band, supported by lower oil prices and portfolio inflows, while sustained importer hedging demand ‌kept its gains in check. The rupee closed at 95.8150 per dollar, up slightly from its close at 95.8725 in the previous session. Asian currencies were mostly range-bound, while regional equities advanced after oil prices fell 2%, as investors hoped for diplomatic progress on the Iran war due to this week's UN meeting, ?and eyed a partial recovery in shipments from Saudi Arabia. Meanwhile, dollar-rupee forward premiums eased, with the August 2027 month-end premium down 6 paisa at 2.94 rupees, reflecting the trimming of previously paid positions, as traders assessed whether India will join the global trend of higher benchmark ‌rates ?as global central banks grapple with inflation. The pound fell slightly on Monday and remained around seven-week lows as traders focused on energy prices and the outlook for central bank interest rates. Sterling fell ‌0.1% to $1.338. It was also down slightly against the euro, with the single currency up 0.1% at 85.78 pence . The pound fell sharply last Wednesday as the dollar rallied after the U.S Federal Reserve hiked interest rates and signalled it could raise them ?again. The Bank of England , by contrast, held rates steady on Thursday, although it also said it may need to hike if the months-long Iran War continues to drag on and choke global energy supplies. Higher interest rates tend to make investments such as bonds more attractive, boosting the currency. The Japanese yen weakened on Monday after volatility late last week put traders on alert for possible currency intervention, while a series of rate hikes and hawkish signals from central banks helped to ‌strengthen the dollar. Traders stayed vigilant for signs of Tokyo stepping into the market as Japanese markets were closed for a three-day holiday, leading to low liquidity. The dollar, meanwhile, rose 0.2% against the yen to 157.20 yen The Bank of Japan raised rates on Friday to their highest level in 31 years, 1.25%, but two dissenting votes and a lack of explicitly hawkish guidance left investors reluctant to buy the currency. The euro was little changed at $1.149 after the far-right Alternative for Germany took first place in state elections in northeastern Germany on Sunday, with Chancellor Friedrich Merz's conservative party suffering its worst regional election defeat ‌in postwar ?Germany, leaving him clinging to power. Markets will also keep closely watching oil prices, which slid to their lowest in 11 days on Monday as investors hoped for diplomatic progress on Iran at this week's UN meeting, ?and a partial recovery in shipments from Saudi Arabia. Traders in money markets were last pricing in a 65% chance of a ?Bank of England rate hike in November, little changed from late last week. Oil prices slid towards ‌the psychological threshold of $100 a barrel and to their lowest in 11 days on Monday as investors hoped for diplomatic progress on the Iran war due to this week's UN meeting, and eyed a partial recovery in shipments from Saudi Arabia.Brent crude futures and US West Texas Intermediate crude touched their lowest since September 10 earlier on Monday. The Brent contract for ?November was at $101.2 a barrel at 1137 GMT, down $2.66, or 2.6%.