The rupee held its own on Friday even as most Asian currencies strengthened against a weaker dollar, which would turn into weekly losses as investors braced for a slower pace of rate hikes by the Federal Reserve as early as next month.
After opening at 81.6763 per dollar, the rupee last changed hands at 81.6963, compared to its previous close of 81.6275, according to Bloomberg.
PTI reported that the rupee ended flat at 81.70 against the US dollar for now.
“The rupee rose today after a tight range of 81.65 to 81.90 in the past 5 days. At a higher domestic currency level of 81.43, there was good dollar buying as the cash dollar shortage slowed the rise. of the rupee continues to hinder.” said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors.
While the domestic currency initially struggled to break through a key resistance level of 81.50 per dollar, it managed to break that level in the afternoon.
But with strong dollar demand, the currency fell back above 81.50.
Sentiment is generally risky, a trader at a private bank told Reuters, adding that the rupee’s trend was contained and unlikely to see any further sharp gains as the domestic currency remains stable around 81 in the short term. .40-81.45 would remain. .
As a result, the rupee underperformed its Asian counterparts this week by remaining in a very narrow range of 81.50 to 81.90 per dollar despite the greenback’s broad decline.
Trading volumes were light overnight due to the Thanksgiving holiday in US markets, but the focus remained on a weaker dollar.
“More and more market participants are becoming confident that the spike in long-term yields is over and we are slowly moving towards a Fed pause,” Naka Matsuzawa, Chief Japan Macro Strategist at Nomura in Tokyo, told Reuters.
The possibility of the Federal Reserve halting monetary policy tightening from December caused the dollar index to continue its downward trend, falling close to a three-month low of 105,750 and down 5.5 percent for the month.
“We still have the third consecutive day of positive risk sentiment… I think that keeps the US dollar pretty much subdued across the board,” Ray Attrill, Head of FX Strategy at National Australia Bank, told Reuters.
Despite the improved sentiment in global markets, investors were concerned about China’s strict lockdowns and the impact on supply chains, which weighed on the yuan.
Chinese cities implemented local lockdowns, mass testing and other limits, dashing recent hopes that the world’s second-largest economy would abandon tight zero-Covid rules and accept the disease.
“Investors are rightly concerned,” said Rob Carnell, Regional Head of Research for Asia Pacific at ING.
“China does not have the adequate health network to handle a full-blown outbreak with many people falling ill. Some sort of mid-term life with Covid is a nice dream, but how do you get there? he added.
According to Reuters, the offshore Chinese yuan last stood at 7.1662 to the dollar and was on track to post a second weekly loss.
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