Indian rupee inches up, but sustainable recovery unlikely

Earlier this week, India's central bank sold dollars in the spot market and also intervened in the non-deliverable forward market to curb the fall

By Reuters

Published: Fri 8 Sep 2023, 11:24 AM

Last updated: Fri 8 Sep 2023, 11:58 AM

The Indian rupee rose on Friday morning amid an uptick in most Asian peers, but traders reckoned that the respite may be brief.

The rupee was at 22.66 to the UAE dirham as of 9.49am (local time), up from its record closing low of 22.673 in the previous session.

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"It continues to be a buy-on-the-dip kind of a market (on the USD/INR)," said Apurva Swarup, vice president at Shinhan Bank India.

Buying dollars above 83.10-83.15 was advisable only for "long-term players", he added.

Earlier this week, India's central bank sold dollars in the spot market and also intervened in the non-deliverable forward market to curb the fall in the local currency, according to traders.

Most Asian currencies were higher, aided by a fall in the dollar index and US Treasury yields.

The dollar index declined to 104.8 in Asia trade, after reaching a six-month high of 105.15 in the New York session. The 10-year U.S. bond yield dipped to 4.22 per cent.

The onshore Chinese yuan fell to its weakest level since December 2007, hit by outflow pressures.

Brent crude oil futures softened on Thursday and retreated to $89.35 per barrel in Asia trade. The contract had hit a near 10-month high of $91.15 this week.

Crude oil prices are the biggest risk to the rupee, a foreign exchange trader at a state-run bank said.

"Rupee is in consolidation phase now ... and will not move much," the trader added.

Next week, investors will watch out for U.S. inflation numbers for further cues on Federal Reserve policy.

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