UAE: Indian rupee steady against dirham on soft dollar, RBI intervention bets

Over the last two weeks, the RBI has been regularly buying dollars via public sector banks, according to market participants

By Web Desk

Published: Tue 18 Jul 2023, 9:59 AM

Last updated: Tue 18 Jul 2023, 10:00 AM

The Indian rupee opened little changed on Tuesday amid a mostly weaker dollar and expectations that the Reserve Bank of India (RBI) may step in.

The South Asian currency traded at 82.06 against the dollar (22.36 against the UAE dirham) at around 9.40am — barely changing from 82.04 (22.35 against the UAE dirham) in the previous session.

[Editor's Note: For real-time forex rates, click widget below or visit KT's dedicated Trading News page here.]

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With the RBI "at least on the face of it" capping the downside (on USD/INR) at 81.80-81.85 and the dollar struggling overall, expect a range of 20 paisa on either side of 82, a foreign exchange trader said.

The USD/INR implied volatility will remain "depressed", the trader added.

Over the last two weeks, the RBI has been regularly buying dollars via public sector banks when the rupee strengthened to the 81.80-81.90 level, according to market participants. The rupee, on a number of occasions this month, has not been able to sustain a move above 82.

The dollar index was hovering not too far from an over one-year low on bets that the US Federal Reserve is nearing the end to its rate-hiking cycle. The Fed is expected to raise rates one last time next week, followed by a long pause.

US retail sales and industrial output data is due Tuesday.

The data "will provide the committee with fresh insight on demand and output for the cyclically sensitive goods and manufacturing sectors", ANZ said in a note.

Asian currencies were higher during the day, while equities were mostly lower despite the positive session for their US peers.

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