The Indian rupee strengthened on Tuesday, rebounding from Friday’s record low, aided by likely intervention from the central bank and an uptick in the offshore Chinese yuan.
The South Asian currency was at 83.3375 against the US dollar (22.71 against the UAE dirham) as of 9.15, UAE time, up 0.1 per cent compared with its closing rate at 83.4250 (22.73 to the dirham) in the previous session.
The rupee had fallen to its record low of 83.43 in the closing minutes of Friday’s session. Indian financial markets were shut on Monday.
[Editor’s Note: For real-time forex rates, click on the widget below or visit KT’s dedicated Trading News page here.]
The Reserve Bank of India (RBI) likely sold US dollars via state-run banks on Tuesday to prevent further depreciation in the rupee, five traders said.
The rupee seems to have shifted into a weaker trading range, with 83.20 likely to be the immediate resistance, said Dilip Parmar, a foreign exchange research analyst at HDFC Securities.
The dollar index was slightly lower at 104.2 after declining 0.2 per cent on Monday while most Asian currencies rose slightly.
The offshore Chinese yuan was higher at 7.24 after having risen 0.7 per cent on Monday, aided by dollar sales from Chinese state-run banks.
Though short-term factors do favour a slightly weaker yuan, depreciation is expected to be gradual and controlled, ING Bank said in a Monday note.
Meanwhile, dollar-rupee forward premiums fell, with the one-year implied yield down 4 basis points (bps) at 1.54 per cent, its lowest level in nearly four months.
Forward premiums were pressured by persistent receiving interest and an uptick in near-maturity US bond yields.
The one-year US Treasury yield rose to 5.01 per cent in Asia trading hours, up 4 bps compared with its close on Friday.
Investors now await the release of US personal consumption expenditure (PCE) inflation data later this week.
(With inputs from Reuters)