Mumbai, Dec 8 (BNA): The Indian rupee strengthened against the dollar, a day after the Reserve Bank of India raised interest rates, amid a drop in US revenues and lower oil prices.
The rupee was at 82.31 to the dollar by 10:35 AM IST, against an earlier close of 82.47.
The company snapped a three-day losing streak on Wednesday after the country’s central bank raised its main repurchase rate by 35 basis points and appeared more hawkish than expected to fight inflation, Reuters reported.
The drop in US revenues and oil prices were helping the currency, but the mood was subdued by fears that higher interest rates would lead to recessions in the US and other advanced economies.
Asian currencies traded between slight weak to higher, while stocks were mostly lower. The Chinese Yuan fell even as COVID rules eased in the country.
“Markets are concerned about recession, but at the same time further hikes by the Fed are not ruled out,” said Ritesh Agarwal, Head of Treasury at CTBC Bank.
“I don’t think the rupee will escape to 83/USD anytime soon, unless the Fed surprises next week. Its near-term range is expected to be 82.10-82.70,” Agarwal added.
The dollar index attempted to rebound from its slide overnight, its first drop since last Friday.
While investors were expecting the US central bank to ease its tightening pace soon, recent upbeat data has added to uncertainty about the policy outlook.
Money markets are forecasting a 91% chance that the Federal Reserve will raise interest rates by 50 basis points next week, peaking at less than 5% in May.
Meanwhile, traders see that the recent decline of the rupee, which saw it weaken from 81.30 to 82.50 levels with dollar inflows, is over.
Anindia Banerjee, Head of Research, said: “Price action suggests that the rally that drove the short (USD/INR) seems to be over. If this is the case, USD/INR could try to converge with its peers and head south.” For foreign exchange and interest rates at Kotak Securities.
SM