Indian rupee ticks higher on likely RBI intervention, traders eye equity flows

The Central Bank likely intervened in the non-deliverable forwards market to support the rupee, seven traders said

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By Reuters

Published: Wed 5 Jun 2024, 9:19 AM

The Indian rupee rose on Wednesday, aided by likely intervention from the central bank after the currency slumped the most in over a year in the previous session following a narrower than expected victory margin for Prime Minister Narendra Modi-led alliance.

The rupee was at 22.739 against the US dollar as of 10.15am IST, up nearly 0.1 per cent from its close at 22.760 in the previous session.

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The Reserve Bank of India (RBI) likely intervened in the non-deliverable forwards market to support the rupee, seven traders said.

"Think we are headed lower (on the rupee) in the near term but the pace will depend on how the RBI acts," a foreign exchange trader at a large private sector bank said.

Benchmark equity indices, the BSE Sensex and Nifty 50, were slightly in the green after logging their worst fall in four years on Tuesday, with foreign investors pulling out a record $1.5 billion, according to provisional exchange data.

Traders expect outflows from Indian equities to continue this week as markets digest the election outcome.

"We now forecast USD/INR at 83.00 by calendar year end, from 82.00 previously," Michael Wan, senior currency analyst at MUFG Bank said.

The dollar index was at 104.2 while most Asian currencies gained amid a slip in US bond yields after data bolstered hopes of rate cuts by the Federal Reserve this year.

Odds of the Fed cutting rates in September ticked higher to nearly 65 per cent, up from about 60 per cent on June 3, according to CME's FedWatch tool.

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Reuters

Published: Wed 5 Jun 2024, 9:19 AM

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