Finance
Due to dollar sales by both local and foreign banks, the Indian rupee closed the day stronger on Wednesday, reaching its highest level in more than two weeks.The rupee closed at 83.0425 against the US dollar, down from 83.1050 the previous day.The local currency saw its biggest monthly growth since June 2023 in January, rising by 0.2%.
Other Asian currencies had monthly declines ranging from 0.8% to 3% for the rupee.According to a foreign exchange trader at a private bank, the rupee benefited from dollar sales from major foreign banks in the second part of Wednesday’s trading session.But the trader said that bids on the dollar-rupee pair limited gains as it rose over the 83.05 mark.
At 103.49, the dollar index was essentially steady but seemed to be headed for a monthly rise of just over 2%.Despite a comeback in dollar strength in January, the rupee managed to hold its footing since the U.S. reduced its aggressive wagers on rate cuts, which placed pressure on its Asian competitors.Although the rupee reached its best level since September earlier in the month, 82.77, some of those gains were offset by equity-related outflows and a higher dollar.
According to the most recent share repository data, foreign investors sold $2.8 billion worth of Indian shares in January, but the outflow was somewhat offset by $2 billion in debt-related inflows.According to Dilip Parmar, a foreign exchange research analyst at HDFC Securities, “the bias favours the rupee bulls amid stronger domestic fundamentals” given the current range of the rupee.Investor attention will now turn to the policy announcement that the US Federal Reserve is expected to make later today. The comments made by Chair Jerome Powell may provide some indication as to when the rate-easing cycle would start, even if the Fed is not anticipated to alter the policy rate at this meeting.
Source:FE
