The rupee gained some ground on Monday, halting a two-session losing streak as the dollar tumbled against a basket of currencies, and hopes of demand recovery in China helped boost Asian currencies.
After falling in the previous two sessions, the domestic currency last changed hands at 82.7025 per dollar, up from its previous close of 82.8687 on Friday, according to Bloomberg.
PTI reported that the Indian currency rose 6 paise and provisionally closed at 82.69 against the US dollar.
“The rupee remained in a range of 82.55 to 82.85 as the RBI supported it near the 82.80/90 levels, and a fall in Brent oil to $79.23 a barrel eased some from the pressure on the rupee. Asian currencies also gained from lows,” said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors.
Still, concerns about a global recession remain, and sentiment is not improving as we approach the end of the year due to weakening economic data.
According to studies published this week, economic activity in Europe, Japan and the Americas contracted in December. In line with this decline, Chinese business confidence has reached its lowest point since the World Economics Survey began collecting data in January 2013.
The festivities were tempered by the prospect of future rate hikes, as signaled by major central banks.
Last week, the Federal Reserve and the European Central Bank (ECB) announced more rate hikes. The Bank of Japan (BOJ), which meets on Monday and Tuesday, is considering changing its current ultra-easing stance.
A report published Saturday by the Kyodo news agency claims that Japan is planning to change its inflation target of 2 percent, potentially giving the central bank more flexibility.
A shift in the BOJ’s ultra-loose monetary policy, which boosted the value of the yen on Monday, could come as a result of a revision of a joint statement between the Japanese government and the BOJ on the latter’s inflation target.
“Where there’s smoke, there’s ultimately fire,” Rodrigo Catril, a strategist at National Australia Bank in Sydney, told Reuters.
“This kind of news that we are getting plays into the view that the government will open the door for the BOJ to take a more flexible approach,” he said, “and that some of this massive undervaluation of the yen can be reversed.”
The main cause of the yen’s 15 percent fall against the dollar this year, making it the worst-performing G10 currency, is the interest rate differential between rising US and stable Japanese rates.
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