Indian rupee rises against dirham in early trade

The currency is likely to hold a range between 22.97 to 23.04 through the day, say experts

By Agencies

Published: Mon 11 Sep 2023, 10:58 AM

The rupee continued its upward trend for the second straight session and appreciated by 9 paise to 82.93 against the US dollar (22.59 against UAE Dirham) in early trade on Monday, tracking positive cues from domestic equity markets and a weak American currency against major overseas rivals.

However, firm crude oil prices hovering above USD 90 (25 against the UAE Dirham) per barrel and outflow of foreign funds weighed on the Indian currency, forex traders said.

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At the interbank foreign exchange, the domestic unit opened 9 paise higher at 82.93 (22.59 against UAE Dirham) and traded in a narrow range of 82.90 to 82.96 (23.02 to 23.04 against the UAE Dirham) against the greenback.

The offshore Chinese yuan reached a high of 7.2932 to the dollar, a rally of about 1 per cent.

China's foreign exchange self-regulatory body said on Monday it would resolutely fend off risks of the yuan overshooting and pledged to take action when needed to correct one-sided and pro-cyclical activities.

This prompted the yuan, which earlier received a boost from strength in the yen following hawkish comments by the Bank of Japan governor, to rise higher.

Some traders reckoned that more downside from here on USD/INR was unlikely.

Dollar demand from local oil companies will keep the USD/INR bid, a foreign exchange trader at a public sector bank said. Importers are likely to be quite active around the 82.80-82.85 level, the trader added.

The dollar index weakened to 104.58 during Asia hours while the 10-year US Treasury yield was a touch higher at 4.29 per cent.

"The rupee is likely to hold a range between 82.70 to 82.97 through the day," said Dilip Parmar, a foreign exchange research analyst at HDFC Securities. Dips in USD/INR are an opportunity for importers to raise their hedges, Parmar said.

Investors will keenly eye inflation readings due in India and the US this week. While India's consumer inflation numbers are due on Tuesday, the US will report the data on Wednesday.

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