Indian Rupee Vs US Dollar: On Tuesday, the rupee recovered its lost ground as the dollar retreated from new two-decade highs, owing to a shortening of the interest rate differential gap and expectations of RBI intervention.
According to Bloomberg, the rupee was last trading at 79.8862 per dollar, up from its previous close of 79.9675, a sharp recovery from a new lifetime low of 80.1288 on Monday. In early trade, the rupee gained four paise to 79.87 against the US dollar, according to PTI.
According to PTI, the Indian currency hit a new all-time low of 80.15 per dollar in the previous session but ended the day below that level as the Reserve Bank of India intervened to defend the currency.
“The fight to contain inflation is expected to continue in the distant future, and rate hikes are expected to put pressure on the rupee and other emerging market currencies,” Swastika Investmart’s Head of Research Santosh Meena told ANI.
Also Read: Indian Rupee Vs US Dollar: Rupee hits all time low of 80.15 against US dollar in early trade
The dollar index, which compares the value of the dollar to a basket of six different currencies, with the euro carrying the most weight, was down from its overnight high of 109.48, not seen since September 2002, to 108.65 at the start of the Asian session.
Aside from the rampant dollar, rising crude prices weighed heavily on the rupee, as India imports more than three-fourths of its oil needs, and an increase in international markets weighed heavily on the currency, driven by importers’ demand for dollars.
On Monday, oil gained the most in more than a month as traders measured supply concerns, including possibility of an OPEC+ output cut.
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While crude oil prices fell on Tuesday after recording their highest gains in more than a month the previous session, they have largely maintained their gains on the expectation of supply cuts ahead of a producers’ conference on September 5. Brent is now trading near $104.50 per barrel, a significant increase from its recent low of around $91.50.
An issue for the rupee is that oil prices are “back on an upward trajectory,” according to a trader at a Mumbai-based bank. “However, if the rupee managed to hold above 80 yesterday despite all the negative cues, then there is little reason to chase the pair (USD/INR) higher,” the trader added.
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