While most Asian currencies declined on Thursday due to increased US bond yields, the Indian rupee slightly increased thanks to anticipated dollar inflows.
As of 10.15 am, the South Asian currency was trading at 83.49 against the US dollar (or 22.75 against the UAE dirham), down from its closing value of 83.5175 (22.76) earlier in the day.
The majority of Asian currencies declined, with the Korean won losing the most, falling by 0.3%, while the dollar index stood at 105.5. After increasing marginally on Wednesday, the yield on the 10-year U.S. Treasury surged above 4.5% in the Asian trading session.
“It seems like there are some mild inflows, but given sufficient (dollar) buying interest at these levels, I don’t think we will see a rise above 83.40,” a trader at an international bank stated.
This week, the rupee has mainly stayed between 83.40 and 83.50 due to pressure from importers, particularly local oil companies, who want dollars, and traders who are hesitant to push the rupee towards its record low due to expectations of central bank intervention.
According to Amit Pabari, managing director of FX advisory firm CR Forex, “India’s economic fundamentals and substantial foreign exchange reserves serve as a safety net, empowering the RBI (Reserve Bank of India) to counter downward pressure on the rupee.”
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