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Updated December 18th, 2023 at 15:46 IST

Rupee hits near 3-month high before being pulled by dollar demand

The rupee ended at 83.0600, against 83.0000 at its previous close. The local currency had climbed to 82.9150 during the session, its highest since September 22.

Reported by: Thomson Reuters
Rupee
Rupee | Image:Republic
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The rupee climbed to a near three-month high on Monday, helped by custodial banks selling dollars, before being pulled back by dollar demand from importers to end marginally weaker.

The rupee ended at 83.0600, against 83.0000 at its previous close. The local currency had climbed to 82.9150 during the session, its highest since September 22.

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"Like Friday, foreign banks were the big sellers (of USD/INR), which must be for their custodial clients," a forex salesperson said.

"Our importer's customers were there, but think they did more than what they usually do."

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The rupee rose to above 83 levels on Friday as well as earlier in the day, largely on the back of surging equity inflows.

Foreign investors bought more than $1 billion of Indian shares on Friday, following $1.5 billion of purchases in the first four days of the week, according to data from National Securities Depository Ltd.

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"It appears that volatility in the pair has returned with a bang. However, with the impending global market holiday period, the market could experience sluggish momentum," said Amit Pabari, managing director at FX advisory firm CR Forex.

The rupee is moving towards its fair value and if the pair convincingly breaches these levels, then a quick movement towards 82.75 and 82.50 levels is anticipated, he added.

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Other emerging Asian currencies also declined, after Federal Reserve officials sought to push back against the dovish interest rate outlook that investors are pricing in.

New York Fed President John Williams, in a CNBC interview, said the Fed is not really talking about rate cuts right now and it is "premature" to speculate about them.

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US yields fell after dovish commentary from the Fed, which expects 75 basis points of cuts in 2024, even as the market is pricing 125 bps of cuts.

Traders now await the Bank of Japan's monetary policy decision on Tuesday, which would be the last major central bank decision for 2023.

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Published December 18th, 2023 at 15:46 IST

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