Updated December 29th, 2023 at 10:50 IST
Rupee set for minimal annual change in two decades amid RBI's intervention
Despite hitting a record low of 83.42 in 2023, the rupee's depreciation has been considerably milder compared to the substantial 10 per cent drop observed last
The rupee showed little movement, heading towards its smallest annual percentage change in two decades, largely influenced by persistent interventions from the Reserve Bank of India (RBI) in the foreign exchange market.
As of 10:30 am, the rupee stood at 83.1550 against the US dollar, a marginal shift from its previous close at 83.1650. Notably, the rupee has experienced a year-on-year decline of approximately 0.4 per cent, marking its most modest percentage change over the past 20 years.
A recent boost in Asian currencies has contributed to the rupee's resilience, supported by growing expectations of interest rate cuts in the United States. Meanwhile, the dollar index, although stabilizing near 101.2 after a slight recovery from a 5-month low, has witnessed a 2 per cent decrease in December, extending a 3 per cent decline from November.
Despite hitting a record low of 83.42 in 2023, the rupee's depreciation has been considerably milder compared to the substantial 10 per cent drop observed last year.
The rupee's stability amidst global volatility can be attributed to the RBI's proactive interventions across various markets, including spot, forwards, non-deliverable forwards, and futures, according to traders. The currency is expected to remain within its current range on Friday, influenced by importer dollar demand at month-end and positive cues from the broader Asian market.
The rupee's resilience has also countered the broader trend of dollar weakness and a significant influx of funds into Indian markets towards the end of the year. Foreign investors injected a total of $27.8 billion into Indian equities and bonds in 2023, with $9.3 billion flowing in just during December, based on NSDL data.
"Moving amidst thin holiday trades, the rupee is anticipated to stay within the range of 83.05 to 83.30 on Friday," remarked Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors, highlighting the currency's stability in the face of year-end market dynamics.
(With Reuters inputs)
Published December 29th, 2023 at 10:50 IST