The Indian rupee fell to a one-week low on Monday as tumbling commodity prices hit global risk currencies, but pared losses after lower-than-expected inflation data raised hopes the central bank would cut interest rates next month. India's headline inflation slowed to the lowest rate in more than three years in March, hardening expectations the Reserve Bank of India would cut interest rates on May 3 for the third time this year.
"For rest of the week the range will be 54.20 to 54.90 as there are no major factors domestically. But we need to see how commodity markets especially gold and oil behave," said Uday Bhatt, a foreign exchange dealer with UCO Bank. The partially convertible rupee closed at 54.6250/6350 per dollar, 0.2 percent weaker than its close of 54.52/53 on Friday. The rupee dropped to as low as 54.7950 in early trade, its weakest since April 8.
In the offshore non-deliverable forwards, the one-month contract was at 54.90 while three-month was at 55.52. In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 54.70 with a total traded volume of around $5.9 billion.