On Wednesday, oil companies’ dollar payments and portfolio withdrawals pressured the Indian rupee, but it was still mostly supported. At 9.24am, the South Asian currency was only slightly altered from the previous session, trading at 83.50 to the US dollar (or 22.75 against the UAE dirham).
We simply have bids (on USD/INR) all the time. A central public sector bank trader stated, “Oil companies are buyers and have seen foreign banks, too, probably related to portfolio outflows and fixing.”
“That we are not moving higher (on USD/INR) is just a function of the market’s belief that the RBI is there.”
According to several traders, the Reserve Bank of India (RBI) was probably selling dollars to prevent the rupee from falling below its record low of 83.5750.
But it’s hard to say for sure. According to one senior trader at a private sector bank, ” At open, they make it known that they will be there, and then the market does the work for them.”
On Wednesday, the rupee fluctuated within a range of fewer than two paisas, with the realized volatility over the previous ten days only reaching an annualized 1% level.
The dollar index increased slightly to 105.56, while most other Asian currencies declined. The dollar’s upward momentum has been regained after it declined due to the less-hawkish than anticipated Federal Reserve and weak U.S. payrolls.
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