Rupee declines: The Rupee experienced a decline on Monday, influenced by the weakening of other Asian currencies and the buying of Dollars by state-owned banks.
Closing at 82.9050 against the US Dollar, the Rupee slipped slightly from its previous session’s close of 82.8775. Throughout Monday’s trading, it fluctuated within the range of 82.83 to 82.9150.
Rupee hindered by purchases
A trader from a private bank noted that while there were supportive inflows, the Rupee’s upward momentum was curbed by the Dollar purchases made by state-owned banks. It remained uncertain whether these purchases were executed on behalf of importers or the central bank.
Traders reported that the Reserve Bank of India (RBI) has been actively buying Dollars in the spot market, counteracting the continuous foreign investments in India’s debt and equity markets. This intervention by the RBI has limited the rupee’s recent gains.
Jateen Trivedi, a vice president and research analyst at LKP Securities, anticipated that RBI’s intervention would persist, contributing to the Rupee’s stability against the Dollar. He forecasted the Rupee to trade within the range of 82.70 and 83.20 leading up to the Federal Reserve’s policy announcement.
Asian currency trends
Across Asia, most currencies saw declines ahead of major central bank announcements. The Bank of Japan’s policy decision was scheduled for Tuesday, with expectations that it might move away from its negative rates policy. Investors were also awaiting the Federal Reserve’s review on Wednesday to gauge any shifts in rate cut projections for the year.
The Fed’s projection of 75 basis points of easing in 2024, made in December, would likely impact the short-term movement of the Dollar based on rate projections and other macroeconomic indicators, according to ING Bank’s analysis. They anticipated the possibility of a hawkish revision in the Fed’s outlook.
(With Reuters Inputs)
