The rupee started Wednesday on a positive note, buoyed by a healthy risk appetite and the strength of most Asian counterparts as the dollar retreated further to near its weakest level in two weeks and a fall in crude prices on prospects of an increase in US supply boosted the domestic currency.
Bloomberg showed the rupee was last at 82.3062 per dollar after opening at 82.3062, compared to its previous close of 82.3600.
PTI said the the domestic currency gained 6 paise to 82.34 against the US dollar in early trade.
“With the dollar index below 112, Brent oil at $ 90.82 per barrel, the Indian rupee was set to open at 82.30 per dollar as risk on sentiments continue for a fourth day,” said Anil Kumar Bhansali Head of Treasury, Finrex Treasury Advisors, before markets open.
“Yesterday, the rupee made a high of 82.02 before tumbling down to 82.40 at the close of day due to buying by oil and some suspected intervention by the Reserve Bank of India in currency futures from $ buy side. For the day the range of 82.00 to 82.50 continues,” he added
The rupee attempted to strengthen to the 82-mark at one point on Tuesday before ending the day at 82.36, with a fag-end sell-off pushing the domestic currency to close nearly flat.
“The session yesterday (Tuesday) was one more indication that the bias on the rupee is to the downside,” a trader at a Mumbai-based bank told Reuters.
The trader said that for a “sustainable and decent recovery” in the rupee, there would “need to be reasonable certainty” that US yields had topped out.
According to some bankers Reuters spoke with, the rupee’s slide back from the 82-level on Tuesday was caused by demand for dollars from importers like oil corporations.
In contrast, two others claimed it was probably because the Reserve Bank of India (RBI) purchased USD/INR contracts before their expiration on Friday.
According to dealers, the latter went against the RBI’s intention to control rupee depreciation pressures and was likely to avoid the volatility on the expiry day.
The currency’s October futures contracts expire the following Friday.
Most Asian currencies were trading higher, while the dollar index dipped to close to 112, near its two-week lows. The positive risk sentiment restrained demand for the greenback.
A fall in oil prices due to concerns over an increase in US supply paired with a slowing global economy and a decline in Chinese fuel demand helped the rupee hold its ground.
A decrease in crude prices favours India, the world’s third-largest importer and consumer of oil, as it lowers imported inflation.
The dollar, which presently dominates as the preferred safe-haven currency, has fallen this week amid a rebound in global shares as a result of some encouraging earnings.
But the Federal Reserve’s fixation on high inflation—even at the risk of triggering a recession—continues to receive underpinning support from the market, which is pricing in two additional 75 basis point rises from the Fed this year.
“We doubt that this is more than a modest pause in the dollar’s bull run,” Sean Callow, a Currency Strategist at Westpac in Sydney, who expects a retest of the peak into November, told Reuters.