NEW DELHI – After closing at a record low on Tuesday, the rupee rebounded against the US dollar on Wednesday as the greenback retreated sharply from 20-year highs touched earlier in the week.
Strength in domestic equity markets and the Reserve Bank of India’s (RBI) recent heavy interventions to shield the rupee from excessive volatility also improved sentiment among currency traders.
The partially convertible rupee opened at 77.3730/$1 as against 77.5600/$1 at previous close. The Indian currency, which was last at 77.4910/$1, moved in a band of 77.3730-77.6260/$1 so far in the day.
On Tuesday, the rupee touched a fresh all-time low intraday level of 77.7850/$1 as weak economic data from China sparked fears of a global economic recession.
However, the domestic currency recouped most losses as the RBI was said to have aggressively intervened in the foreign exchange market – both in the spot market as well as the forwards segment, dealers said.
According to the dealers, the central bank has been heavily selling dollars from its foreign exchange reserves and preventing excessive volatility in the exchange rate since Russia’s invasion of Ukraine in late February led to upheaval in global financial markets.
Coupled with the Federal Reserve’s aggressive rate hike plan, the risk aversion caused by the Ukraine war, has caused the dollar to strengthen sharply as investors favoured the safety of the greenback amid higher US interest rates.
The US dollar index, which had hit a 20-year high of 104.19 earlier this week, fell sharply from those levels and was last at 103.40.
“As the dollar index fell after a good retail sales data from US there was some positivity all over as risk-on sentiments took over from risk aversion pertaining in the last seven days,” Finrex Treasury Advisors Head of Treasury, Anil Kumar Bhansali said.
“Rupee to identify at 77.55 unchanged as Asian currencies still lower against the dollar. Range for the day 77.30 to 77.80. Dips near to 77.30 need to be bought by importers while exporters may sell above 77.60 to 77.70 levels,” he said.
Source Name:-Economic Times