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The Indian rupee declined against the U.S. currency on Tuesday, fuelled by the dollar’s surge versus its major peers and importer hedging, though the Reserve bank of India’s likely intervention kept the drop short of the 83-per-dollar mark.
The rupee closed at 82.8800 per U.S. dollar, down from 82.7375 in the previous session.
The local currency on the interbank order matching system fell to 82.9950, prompting state-run banks to sell dollars, likely on behalf of the RBI, three traders told Reuters.
The central bank’s intervention was in line with its action in recent trading sessions, which traders suspect led to the rupee repeatedly finding support near the 82.90 level.
“(The) RBI is not allowing it (USD/INR) to move higher and therefore it is unable to cross 83.00 for the present,” said Anil Bhansali, head of treasury at Finrex Treasury Advisors.
The 83.05-level should be a stop-loss for unhedged positions of importers, he added.
The rupee which was anyway under pressure on account of importer hedging was further hurt by the dollar’s surge against its major peers. The dollar index rose almost 1%.
The dollar index will be eyeing the slew of key U.S. economic data as it seeks to recover from the near 8% decline in the last quarter. U.S. ISM manufacturing and services data is due later this week, alongside the monthly jobs report.
The dollar’s jump came despite the relatively upbeat risk appetite and the fall in Treasury yields. European shares climbed 1.5% and U.S. equity futures were up about 1%.
Investors are focussed on the outlook for global growth following aggressive rate hikes by major central banks. This week’s U.S. data will help investors gauge how growth is holding up and the likely path for U.S. interest rates.
Meanwhile, it was a choppy session for rupee premiums, with the 1-year implied yield trading in a 1.95% to 2.02% range.
(Reporting by Nimesh Vora; Editing by Savio D’Souza)
(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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