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The Indian rupee was a tad lower to the U.S. currency on Friday, with dollar sales by public sector banks saving the local currency from bigger declines.
The rupee was quoting at 82.8375 per dollar by 10:20 a.m. IST, compared with 82.76 in the previous session.
While public sector banks are on the offer (on USD/INR), it is unclear whether it’s for their books or for the RBI, a spot trader at a private lender said. However, the price action suggests that the RBI is not there, the trader said.
The Reserve Bank of India is known to intervene in USD/INR on either side to manage rupee’s level and volatility.
The rupee and most of its Asian peers struggled on concerns that hawkish central banks may fuel an economic slowdown.
The European Central Bank on Thursday raised rates by 50 basis points, but like the U.S. Federal Reserve, signalled the need for more hikes to deal with the inflation threat. Interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive, according to ECB monetary statement.
European equities plunged 3.5% on Thursday, while S&P 500 index dropped 2.5%.
Major central banks staying on course on hawkish messaging at a time when data is weak is prompting concerns on the growth outlook. U.S. retail sales and factory production in November fell short of expectations, data showed on Thursday.
The rupee forward premiums were broadly unchanged with the 1-year implied yield hovering near the 2% level. Indian equities added to Thursday’s losses, while Brent crude futures dipped marginally.
(Reporting by Nimesh Vora; Editing by Dhanya Ann Thoppil)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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