Rupee weakens to near 79.90 to the dollar; Stock Stream, RBI Eyed
The Indian rupee opened slightly lower on Tuesday, extending losses for the third straight session as the impact on economic growth of tighter central bank policy sapped risk appetite as investors took refuge in safe-haven assets.
PTI reported that the Indian currency fell 4 paise to 79.88 against the US dollar in early trading after the rupee recouped early losses to close at 79.84 on Monday, despite a strong greenback overseas. and a massive sale of shares.
On the interbank exchange, the rupee opened at 79.85 against the dollar, then fell to 79.88, registering a drop of 4 paise from the previous close of 79.84, according to PTI.
“The rupiah could continue to extend its losses over the week and possibly test new lows on the outlook that the US Federal Reserve will continue to offer big rate hikes,” said Sriram Iyer, senior research analyst at Reliance. Securities at PTI.
Additionally, inflation concerns could also keep the local unit under pressure. However, the presence of the Reserve Bank of India (RBI) could limit losses in national unity.
Reuters quoted the rupiah at 79.8450 to the dollar, down from 79.8675 in the previous session.
The local currency has fallen for three consecutive sessions and is near its all-time low of 80.0650 last month.
Bloomberg showed the Indian currency last changing hands at 79.8712, down from 79.8687 in the previous session, with the rupee trading between 79.8150 and 79.8800.
The rupee remains in a downtrend, but the downward momentum is only likely to strengthen when the rupee hits a new high, a trader at a Mumbai-based bank told Reuters.
“The likelihood of RBI intervention will prevent speculators from creating new long positions (on USD/INR) until the rupiah stays above 80,” the trader added.
The RBI began selling dollars to protect the rupee from the volatility caused by the aggressive path of rate hikes by the US Federal Reserve. India’s foreign exchange reserves have fallen to their lowest level since November 2020 and are down more than $60 billion since Russia invaded Ukraine.
The decline in demand for risky assets was influenced by fears that central banks’ tightening policy to combat price pressures could trigger an economic meltdown.
Indeed, Indian equity benchmarks fell for the third day in a row on Tuesday, following weakness in Asian stocks, which were down for a sixth straight session after another spike in energy prices in Europe hit fueled recession fears and unease about the Chinese economy.
The dollar held firm on Tuesday on safe-haven flows. At the same time, the euro stagnated around a two-decade low as investors braced for a harsh winter in Europe as it grappled with energy supplies and wider climate concerns. economic growth.
“The dollar index started slightly lower on Tuesday morning in Asian trading, but the decline remained capped on safe-haven flows,” said Reliance Securities’ Mr. Iyer.
The euro hit its lowest since late 2002 at $0.9926 overnight and was only marginally higher at $0.9939.
Asian currencies also fell on Tuesday. The offshore Chinese yuan fell to 6.8748 to the dollar.
Meanwhile, according to preliminary BSE data, foreign investors turned net sellers of Indian stocks on Monday.
But crude oil rose as renewed concerns over tight supply dominated market sentiment after Saudi Arabia warned that the major oil producer could cut output to correct a recent drop in oil prices.