Rupee Rises 95 Paise To 80.86 As Dollar Loses Its Shine

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Rupee Rises 95 Paise To 80.86 As Dollar Loses Its Shine
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Rupee Today: Domestic currency rallies against a weaker dollar

The rupee gained sharply on Friday, reversing losses in the previous session, as the dollar lost its shine after US inflation data slowed driving hopes the Federal Reserve would move away from its ultra-aggressive tightening policy.

Bloomberg quoted the rupee at 80.8625 per dollar after opening at 80.6888, compared to its previous close of 81.8112.

The domestic currency traded in the 80.5863 to 80.9888 range, below the 81 per dollar mark. The last time the currency traded in the 80-per-dollar-handle was seven weeks ago.

That sharp pullback was driven by slowing US inflation news and easing COVID-19 restriction in China.

Following an overnight sell-off caused by lower-than-expected US inflation data that gave the market hope for a consumer price peak that may temper the Fed’s aggressive monetary tightening drive, the dollar remained weak on Friday. 

The yuan jumped after Chinese health officials relaxed parts of the nation’s strict COVID-19 restrictions, including lowering quarantine periods for people who had close contact with cases and visitors.

Following the news, the onshore yuan increased by more than 1 per cent, while the offshore yuan reached a high of 7.0592 per dollar, the highest level in more than a month.

“This is something that’s been talked about, but the fact that they’ve done it is a step in the right direction in terms of fine tuning the zero-COVID policy,” Moh Siong Sim, Currency Strategist at Bank of Singapore, told Reuters.

The China COVID news gave the risk sentiment a further boost, and the dollar’s feeble attempt to make up some of its significant overnight losses earlier in the day was mostly abandoned.

The euro increased by 2 per cent overnight and reached $1.0234, its best level since August, moving further above parity with the greenback.

“Maybe this is the perfect storm of good news,” added Moh Siong Sim.

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