The rupee on Tuesday gained 12 paise to settle at 87.2125 12, supported by likely intervention from the Reserve Bank of India and gain in its Asian peers, with the dollar index falling to its four-month-low level and crude oil prices remaining subdued. The volatile trend in domestic equity markets, foreign capital outflow and trade-related uncertainties capped the gains.
On Monday, the rupee slumped 45 paise, its highest single-day decline since February 25.
“The rupee saw an upward movement, driven by the strength of regional currencies that performed better against the US dollar. Additionally, the weakening of the greenback, fuelled by growing concerns about a potential economic downturn or recession, provided further support to the rupee. Looking ahead, the USD-INR pair is expected to have support at the 86.87 level while the resistance point is seen at 87.55,” said Dilip Parmar, senior research analyst, HDFC Securities, in a note.
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The dollar-rupee forward premiums gained, with the one-year implied yield rising 4 basis points to 2.20%, owing to a decline in US bond yields.
“Although it (rupee) appreciated, the pressure was intact on strong dollar demand as forward positions in non-deliverable forwards are set to mature,” said a forex trader with a state-owned bank.
The market may take cues from job openings data from the US. Investors also await the release of US and India’s consumer inflation data, due on Wednesday. The data is expected to influence expectations of rate cuts by the countries’ central banks.
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