Finance
The Indian rupee declined for the third consecutive session on Thursday, falling to its lowest level in two and a half months, reflecting widespread losses in Asian peers, but expected dollar sales by the country’s central bank limited the currency’s losses.
The rupee finished at 82.7225 per dollar, down 0.2% from 82.5825 on Wednesday.
It had dropped to an intraday low of 82.81, its lowest level since May 24.
However, some foreign exchange traders told Reuters that the Reserve Bank of India (RBI) likely sold dollars through several state-run banks at 82.75-82.80 rupee levels, preventing the rupee from falling further.
“Global factors are stacked up against the rupee and a fall to 83 looks pretty much in sight now,” said Ritesh Bhusari, deputy general manager for treasury at private sector lender South Indian Bank.
“In case the rupee is able to sustain below 83 convincingly, despite the RBI’s intervention, we foresee a fall towards 83.50 in due course,” he said.
According to a Reuters poll, the rupee will fluctuate in a narrow range for the next three months before strengthening modestly in a year as the RBI uses its massive foreign exchange reserves to keep the currency stable.
Most Asian currencies and equities continued losses following a selloff in US markets on Wednesday, fueled by Fitch’s downgrade of the US credit rating. Indian equities also extended their losses from Wednesday.
Aside from the credit downgrading, the increase in private payrolls in the United States caused Treasury yields to climb.
The 10-year US Treasury yield hit 4.1650% on Thursday, the highest level in nearly nine months.
The increase in US yields strengthened the dollar. On Thursday, the dollar index hit a near one-month high of 102.84.
Investors are looking forward to the Bank of England’s policy decision later in the day, as well as non-farm payroll data from the United States on Friday.
Source:BS
