Today, the country's non-oil sector accounts for about 74 per cent of the total GDP
business1 day ago
The Indian rupee dropped in early trade on Tuesday, weighed down by the recovery in the dollar index and a decline in Asian peers.
The South Asian currency was trading at 82.80 to the US dollar (22.56 against the UAE dirham) at around 8am — down from 82.74 (22.54 against dirham) on Monday.
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The dollar index rose in Asia, and has now recovered a large part of its losses suffered post the US jobs data. Asian currencies were down between 0.2 per cent and 0.6 per cent, with the offshore Chinese yuan slipping to 7.2250 to the dollar.
"With Asia down, we are back to that level at which interbank will be on the public sector bank watching mode," a forex trader at a bank said.
The Reserve Bank of India has repeatedly intervened via public sector banks to prevent the currency from weakening past 82.80-83.
"It does not require saying that the whole of the 82.80-83.00 region is critical. You take out 83 and we will have a round of major stop losses," the trader said.
The dollar was supported by comments from Fed Governor Michelle Bowman that additional interest rate hikes will likely be needed in order to lower inflation to the U.S. Federal Reserve's 2 per cent target.
The US inflation data due on Thursday is seen as key to the Fed's outlook. Economists polled by Reuters expect the core consumer price index to rise 0.2 per cent month-on-month and by 4.8 per cent on-year.
"The Fed is wary of upside risks to elevated inflation given demand for labour remains excessive, and most policy makers think the policy rate will need to be kept restrictive for some time to get inflation back to target," ANZ said in a note.
"Risks appear skewed that the Fed's work is not yet done."
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