Indian rupee drops against UAE dirham as dollar demand increases

Importers, including local oil companies, were spotted buying dollars, traders said

By Reuters

Published: Thu 26 Sep 2024, 12:14 PM

Last updated: Thu 26 Sep 2024, 12:15 PM

The Indian rupee dropped on Thursday due to increased dollar demand from importers related to month-end payments and likely unwinding of long positions after it failed to hold above a key resistance level at 83.50.

The South Asian currency was at 83.6850 against the US dollar (22.80 against UAE dirham) as of 10.45am IST (9.15am, UAE time), down 0.1 per cent from its closing rate of 83.5925 (22.78).

Asian currencies were mixed while the dollar index was down 0.1 per cent at 100.8.

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Importers, including oil companies, were spotted buying dollars, traders said.

A large foreign bank has also been consistently bidding for dollars, which is likely related to an unwinding of some long bets on the Indian rupee, a trader at a foreign bank said.

While "inflows have been quite strong, especially in the debt market" over recent sessions, strong dollar demand between 83.45 and 83.50 has kept a lid on the currency's gains, a trader at a private bank said.

The Indian rupee rose to a near three-month peak of 83.48 last week. Overseas investors have net bought about $10 billion of Indian equities and debt over September so far, the highest monthly inflow since December last year.

"Over the week, the (dollar-rupee) pair has opened lower, only to rebound as importers rush to meet month-end dollar demand, causing USD/INR to close higher," Amit Pabari, managing director at FX advisory firm CR Forex, said.

The attention on Thursday lies squarely on remarks from Federal Reserve Chair Jerome Powell, who is slated to speak later in the day, alongside a host of other policymakers, and may offers cues on the future trajectory of policy rates.

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