Rupee recovers from record low on RBI support,indiabusinessport,com

 The Indian rupee recovered from a record low to end flat on Monday after the Reserve Bank of India (RBI) likely intervened in the markets, but analysts maintained their view that the local currency was set for further losses.

The partially convertible rupee pared all its losses to close unchanged at 82.32 per dollar, pulling back from a record low of 82.6825 hit in early morning trades.

The RBI likely sold dollars via state-run banks at 82.60-82.65 levels, traders had told Reuters, as a U.S. jobs report firmed bets of more aggressive rate hikes by the Federal Reserve and prompted a sell-off in Asian assets.

RBI has been in the market “continuously”, as they “clamped down” on the rupee to bring it to 82.40 to the dollar, said a trader with a Mumbai-based bank.

A holiday in the U.S. meant that dollar purchases for trade accounts were muted to some extent, also helping the central bank to keep the rupee well contained, he added.

The Indian currency has gone from trading under 80 per dollar to above 82 in a span of less than three weeks, with the central bank seen stepping in occasionally to curb volatility.

India’s depleting foreign exchange reserves in the face of rupee’s rapid depreciation were becoming a point of concern, as they fell 16% at September-end compared to the beginning of the year. This was the biggest percentage drop among emerging Asian markets, said Goldman Sachs analysts.

Economists from HDFC and Elara Capital also expressed concerns over U.S. Federal Reserve’s expected rate hikes, rising oil prices and widening trade deficit further weighing on the currency.

Elara’s Garima Kapoor warned the rupee could fall to 83.50 per dollar by December and slip even further to 84-85 by March.

Meanwhile, the dollar index climbed above 113-levels and oil prices hovered near $97 per barrel. Crude has surged about 10% this month alone on output cuts, with analysts saying the $100 price point was on the horizon. 

This story has been published from a wire agency feed without modifications to the text.

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