NEW DELHI: The rupee gained versus the US dollar as the greenback retreated globally from multi-year highs and as domestic stocks notched up gains following five straight days of losses, dealers said.
A decline in global crude oil prices also buoyed the domestic currency by helping ease some concerns over India’s inflation and current account, given that the country is a massive importer of the commodity.
After opening marginally weaker at 77.4400/$1 versus 77.4150/$1 at previous close, the rupee was last trading at 77.2910/$1. The domestic currency moved in a band of 77.2680-77.6240/$1 so far in the day.
On Thursday, the rupee had touched an all-time low intraday level of 77.6250/$1. The Indian currency, which has witnessed sharp volatility this week, had settled at a record closing low of 77.4650/$1 on Monday.
The recent bout of weakness in the rupee has been caused by a sharp rise in the US dollar index, which strengthened to near two-decade highs this week on expectation of an aggressive pace of rate hikes by the Fed.
The anticipation of a series of rate hikes in the world’s largest economy has exacerbated an unprecedented bout of selling pressure by overseas investors in Indian equities. So far in 2022, FIIs have net sold a massive Rs 1.4 lakh crores worth of domestic stocks.
The sharp weakness in benchmark stock indices also dragged the rupee down earlier this week. The Sensex and the Nifty, which have shed around 4 per cent so far in the week, were trading 1 per cent higher at 10:50 am IST.
Sentiment among currency traders has also improved because of likely heavy market interventions by the Reserve Bank of India aimed at preventing excessive volatility in the rupee.
The central bank, whose foreign exchange reserves are currently just shy of $600 billion, has been said to have intervened heavily in the forwards markets of late in order to rein in the rupee’s fall.
“After extending its all-time-low towards 77.62 levels, the Indian rupee was seen once managed by RBI as it was seen recovering back sharply up to 77.37 levels. Although, weaker global sentiment, a fall in EM & DM FX against USD will keep rupee off the track,” CR Forex Advisors MD Amit Pabari said.
“Overall, RBI’s active intervention in bonds and forex is likely to remain high and we could see volatility spiking day by day. Broadly, the USDINR pair is likely to trade in a wide range of 76.50 to 78.50 with a bullish bias.”
Source Name:-Economic Times