The rupee recovered below 83 against a resurgent dollar, aided by the intervention of the Reserve Bank of India after the domestic currency plunged sharply to an all-time low of 83.29, driven largely by a global sell-off of risky assets in a seesaw. session on Thursday.
Bloomberg showed that the rupee last changed hands at 82.7538 per dollar after opening at 82.9825 and crashing to a new all-time low of 83.2925.
PTI reported that the domestic currency made up for 25 paise to temporarily close at 82.75 against the US dollar, with purchases of domestic equities at the end of the day also boosting sentiment.
“After hitting a lifetime low of 83.2325, the rupee bounced back and plunged below $83/$. It currently trades at 82.85 as the RBI sold dollars in the open market to process the sharp depreciation of the US dollar. currencies,” said Anil Kumar Bhansali, head of Treasury at Finrex Treasury Advisors.
Reuters reported that the exchange rate of the rupee against the dollar was last at 82.86, down from 83,0200 the previous day. Early in the session, the local unit fell to a record low of 83.2625.
According to traders who spoke to Reuters, the RBI sold dollars and engaged in buy/sell swaps as the rupee fell to a new record low.
Recently, the RBI intervened through dollar advances rather than cash transactions, as the central bank likely held the cash reserves to prevent its involvement from affecting the rupee’s liquidity, analysts said.
A Reuters study found that the rupee could fall further to 84.50 in December.
In the previous session, the domestic currency had reversed sharp gains from earlier on Wednesday to close at its weakest level of 83.02 per dollar, driven by the RBI likely buying dollars at around 82 in currency futures to bolster its ability to intervene. to reinforce.
The rupee’s decline was bolstered by broad dollar strength and halted losses at 72.40, a level the RBI likely wanted to protect.
Yesterday, the weakness of the rupee was caused by the likely purchase of dollars at 82.02 by the RBI in currency futures and large outflows of approximately $500 million from Gas Authority of India Limited (GAIL) and Mangalore Refinery and Petrochemicals Limited ( MRPL),” Mr Bhansali said.
“The RBI failed to protect 82.40 and a short cover of the pair brought it to 83.00, with stop losses between 82.40 and 83.50,” he added.
Separately, the dollar’s appeal has increased, driven by additional signs that strong inflation will keep major central banks in rate-raising mode after UK inflation hits a 40-year high.
A spike in US Treasury yields has hampered the recent surge in global risk assets amid expectations that the Federal Reserve would continue to raise interest rates rapidly.
Shocking inflation data from Canada, Britain and New Zealand released this week also showed that global central banks are still battling to control decades-long inflation, even at the expense of economic growth, the increasing fears of a recession and increasing demand for safe-haven assets.
For the first time since 1990, the dollar hit the symbolic 150 yen threshold on Thursday, helped by Treasury yields trading at multi-year highs and keeping markets on the alert for Japanese authorities’ intervention.
Movements in the other major currencies were more restrained, with the euro at $0.9786 and the pound continuing to fall. The euro was still trying to make up for the ground it lost during the previous day’s gains in the dollar.
By Wednesday’s close, the fragile Japanese yen had lost ground for 11 consecutive sessions and has already renewed its 32-year lows six times.
“As long as the end point of US interest rates remains unclear, dollar strength will not abate. 150 was just a pass point, and the focus is now on whether it will break above 160,” Takumi Tsunoda, Senior Economist at Shinkin Central Bank Research Institute in Tokyo, told Reuters.