The rupee appreciated to 82.94 versus the US dollar on Tuesday. Earlier in the session, the Indian currency rose three paise against greenback. The dollar index — which measures the American currency against the yen, the pound, the Canadian dollar, the Swedish krona, the Swiss franc and the euro — was last trading 0.1 percent lower at 103.
Crude oil benchmarks eased on Tuesday. At the last count Brent crude futures were trading 0.17 percent lower at $84.32 per barrel. WTI futures, too, were trading 0.16 percent lower at $79.99 per barrel.
"Despite hitting a recent record low, the Indian rupee displayed resilience against global downturns, supported by the central bank's interventions to stabilise around 83.15-20 levels. We'll explore its strength amid negative sentiment and the bank's actions, concluding with the currency's outlook," said CR Forex's Amit Pabari.
Pabari lists the points working in favour of and against the Indian currency:
Pointers against the Rupee:
• MSCI Asia ex-Japan index has witnessed an extended eight-day decline, marking its longest losing streak since January 2020. This suggests prevailing risk-off sentiment across the Asian market.
• Notably, China's blue-chip index has experienced a decline in nine out of the last eleven sessions, largely attributed to growing concerns in the property sector. Despite authorities' attempts to curb capital outflows, foreign investors continued to offload Chinese stocks for an eleventh consecutive day on Monday.
• On Monday, the PBoC implemented a 10 basis points reduction in the one-year loan prime rate. Consequently, the spread between Chinese and U.S. 10-year bonds widened to 180 basis points, the largest gap since January 2007. The offshore Yuan initially depreciated to 7.33 before moderating to 7.29 levels.
• Supported by the 10-year yield reaching 4.35 percent on Monday, its highest point since late 2007, the dollar maintained its strength. Simultaneously, the real 10-year yield surpassed 2% for the first time since July 2009.
Pointers in favour of Rupee:
• Following a substantial Yuan decline from 7.10 to 7.35, frequent interventions by the PboC have been noted. State-owned banks are reportedly aiding the offshore Yuan, potentially even considering US treasury bond sales.
• The weakening Japanese yen's breach of the 146 level sparks intervention speculation concerning the BoJ.
• Domestically, the RBI is curbing the Rupee decline at 82.20-25, backed by supportive fundamentals, barring a recent inflation surge.
First Published: Aug 22, 2023 9:53 AM IST
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