The news is by your side.
AED
$0.27
0%
AFN
$0.01
+2.26%
ALL
$0.01
+0.7%
AMD
$0.00
0%
ANG
$0.55
+0.05%
AOA
$0.00
-0.22%
ARS
$0.01
+0.29%
AUD
$0.70
-0.65%
AWG
$0.56
+0.03%
AZN
$0.59
0%

From heading towards Asia’s worst currency tag, rupee scripts turnaround and enjoys Santa


NEW DELHI – The rupee gained for the fifth straight day versus the US dollar, ending the week 1.4 per cent higher, as banks persistently sold the greenback on behalf of exporters who rushed into lock current dollar/rupee levels, noting the firm strength shown by the domestic currency, dealers said.

The partially convertible rupee settled at 75.02/$1 on Friday against 75.2350 per US dollar at the previous close. The Indian currency, which had opened at 75.1600/$1, came within a stone’s throw off, breaching the psychologically significant 75/$1 mark, moving in a band of 75.00-75.1950/$1.

The rupee has witnessed a remarkable turnaround of fortune in the current week after taking a heavy beating in the first fortnight of December as global central banks adopted markedly hawkish stances. Before this week’s price action, the rupee had weakened close to 2 per cent against the US dollar so far in the quarter and was heading towards gaining the tag of Asia’s worst-performing currency.

On December 15, the Indian currency had plummeted to an 18-month low of 76.23/$1 as a combination of factors, including the Fed’s decision to announce an end to pandemic-era asset purchases and concerns over the global economic impact of the Omicron strain of the coronavirus eroded appetite for emerging market currencies.

The growth fears coupled with the prospect of higher US interest rates sent foreign portfolio investors rushing to exit Indian equities, with these players having reduced their exposure by close to a trillion rupees in a month and a half.

However, with the Reserve Bank of India subsequently flexing its considerable muscle on the foreign exchange reserve front, investors who had been emboldened to speculate against the domestic currency were compelled to square off those bets, dealers said.

The latest data showed that the RBI’s total foreign exchange reserves stood at $635.83 billion as of December 10, among the highest held by any central bank across the globe.

A spate of corporate flows and exporter activity towards the end of the calendar year also resulted in banks offloading the US currency, accentuating the rupee’s rise amid thin trade volumes, dealers said.

“It has been a combination of factors-the first trigger was the RBI’s strong intervention. After Fed happened, traders were wondering where the central bank would set the limit for rupee’s depreciation because the currency had weakened so sharply in the first couple of weeks,” a dealer with a foreign bank said on condition of anonymity.

“Once RBI stepped in strongly, and we witnessed the year-end corporate and exporter activity, successive technical levels broke; the low volumes also contributed. Now, if 75/$1 breaks, we would be in a new technical zone. Although by the end of the calendar year, we expect rupee at 75.50/$1 because of trade deficit and elevated crude,” he said.

Government bonds ended steady with the yield on the 10-year benchmark 6.10 per cent 2031 paper settling unchanged at 6.46 per cent.

The results of today’s Rs 24,000 crore primary debt sales were largely in line with expectations, dealers said. Sentiment in the market, however, has worsened as recent liquidity measures taken by the RBI indicate the central bank’s desire to nudge overnight rates higher from current levels, dealers said.



Read More : From heading towards Asia’s worst currency tag, rupee scripts turnaround and enjoys Santa

You might also like
Leave A Reply

Your email address will not be published.