The rupee held its ground against a stronger dollar on Thursday, extending a stable pattern this week on RBI intervention to limit the currency’s sharp fall, even as the global mood buoyed major US Pointed to risk aversion ahead of inflation data.
According to Bloomberg, the rupee was at 82.3338 per dollar after opening at 82.2800 against the previous 82.3112.
PTI reported that the rupee rose by 2 paise to 82.31 against the US dollar in early trade.
“RBI continues to protect the dollar by selling and parking it further to avoid liquidity crunch in the rupee, which is already running in losses. Rupee stands at 82 for the day with mid-month demand today. 82.50 to 82.50, said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors.
Financial markets chiefs await US inflation data that could determine the magnitude of a rate hike this cycle by the Federal Reserve following minutes of the last meeting on Wednesday, pointing to a bullish mood.
The sell-off in global risk assets extended through Thursday, even as the safe-haven but fragile yen was not spared.
The yen hit a trough of 146.98 per dollar overnight – its lowest level since August 1998 – and last traded at 146.82.
The release of US inflation data later on Thursday is expected to support forecasts that the central bank will continue to aggressively tighten policy, especially as Fed Governor Michelle W. The “big growth” will be on the table. Inflation remains high.
The details are going to be what matters here … and the drivers behind the core (reading) will be super important,” Rodrigo Catril, a senior currency strategist at National Australia Bank, told Reuters.
“It would require a fairly small number to replace the rhetoric from the Fed, and we don’t see that happening at the moment,” he said.
Fears that the aggressive policy of major central banks in their fight against rising inflation would lead to a global recession, fueled the dollar’s safe-haven appeal and weighed on nearly every single currency.
The rupee has fallen from around 74 per dollar at the start of the year to over 82 against the greenback, a decline of more than 10 per cent.
This has never been seen before, despite the RBI’s attempt to stop the rupee from breaking key psychological levels.
A Reuters report quoting bankers and traders showed that the RBI asked local banks to refrain from taking any further positions of the rupee in the offshore market in its fight to contain the dramatic fall of the rupee this year.
It is the latest measure that the Indian central bank has used besides selling dollars through state-owned banks in the spot and futures markets by burning its foreign exchange reserves – from the FX war chest since Russia invaded Ukraine in late February. About $100 billion has been spent.
India’s retail inflation rose to 7.41 per cent last month, the highest since April, driven by rising food and fuel costs, which are already straining the household budget.
This will affect India’s poor and middle class, which are already suffering economic shocks related to the COVID-19 pandemic, especially the rise in prices of basic commodities like cereals and vegetables, as they spend a significant portion of their income on food. Spend.
The latest inflation print adds more pressure on the RBI in its fight against rising price pressures and a weaker rupee as it tries to balance its measures to ensure that inflation is brought down without hurting the country’s economic growth.