UAE: Indian rupee barely changed against dirham in early trade

The Reserve Bank of India was selling dollars to keep the rupee from sliding below the all-time low, say traders

By Reuters

Published: Wed 8 May 2024, 10:42 AM

The Indian rupee was under pressure on Wednesday on portfolio outflows and dollar payments by oil companies, but remained largely supported.

The South Asian currency was at 83.50 to the US dollar (22.75 against UAE dirham) at 9.24am, barely changed from the previous session.

"It's just that we have non-stop bids (on USD/INR). Oil companies are buyers and have seen foreign banks, too, likely related to portfolio outflows and fixing," a trader at a large public sector bank said.

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"That we are not moving higher (on USD/INR) is just a function that the market believes the RBI is there."

Several traders said it was likely the Reserve Bank of India (RBI) was selling dollars to keep the rupee from sliding below the all-time low of 83.5750.

"However, it's difficult to be sure. The way I see it is that at open, they make it known that they will be there and then the market does the work for them," a senior trader at a private sector bank said.

The rupee has been in a less-than-two-paisa range so far on Wednesday, with the realised volatility for the last 10 days at just an annualised 1% level.

Other Asian currencies were mostly weaker and the dollar index inched up to 105.56. The dollar has managed to reclaim its upward momentum following its slide on the less-hawkish-than-expected Federal Reserve and weak U.S. payrolls.

U.S. interest rate outlook remains a key point for the dollar. Federal Reserve Bank Minneapolis President Neel Kashkari said on Tuesday that while he has pencilled in two rate cuts for this year, it's possible that the Fed only cuts once, or opts for no rate cuts this year.

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