The rupee reversed gains from earlier in the session and fell sharply Monday, warning a Federal Reserve policymaker that the bank would need a series of soft inflation reports to move away from rate hikes and bolstered the battered dollar.
Bloomberg quoted the last rupee at 81.26 per dollar after opening at 80.5350, compared to 80.81 on Friday.
PTI reported that the rupee fell 48 paise to provisionally close at 81.26 against the US dollar.
“The Indian rupee has depreciated on the back of the US dollar recovery and weak domestic markets. However, the rupee opened higher on positive macroeconomic data,” said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas.
Overall dollar weakness amid rising expectations from the not-so-aggressive Federal Reserve could also support the rupee at lower levels. Continued FII inflows could also support the rupee. Higher crude oil prices, however, could spark a sharp upward trend. apply pressure,” Choudhary said. added.
The domestic currency traded in the range of 80.5125 to 81.2838 with the rupee pushing back above 81, bringing last week’s rally to a halt.
“The rupee opened at 80.51, which was the high for the day as oil companies, defense companies and the MSCI outflow held up the dollar well,” said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors.
“There are about 15 Fed speakers this week and any aggressive tone from them could change the dollar’s downward direction,” he added.
A cooling inflation report on Thursday pushed the dollar down nearly 4 percent for the week, the fourth biggest drop since the era of free-floating exchange rates began more than 50 years ago.
However, Federal Reserve Governor Christopher Waller said on Sunday that markets were way ahead of themselves after just one inflationary push.
That helped limit the sharp drop in the dollar.
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