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Rupee continues to hold at 83.50/USD amid reviving dollar and central bank support

The rupee spent much of Tuesday’s session around 83.50 on likely dollar selling by the Reserve Bank of India.

“Today should be very similar to yesterday, with the action around 83.50,” said a currency trader at a bank.

“Yesterday it looked like a hand was offered at 83.50, which based on how it was, had to be the RBI.”

The dollar index rose slowly to 105.54 amid renewed weakness in the Japanese yen that trickled down to other Asian currencies. The offshore Chinese yuan weakened to 7.2294 and other Asian currencies fell between 0.2% and 0.5%.

The sell-off in the dollar index has stalled after finding support at the 105 level, MUFG said in a note.

The yen fell to 155.20 per dollar, well below last week’s peak of 151.86, due to possible interventions by Japanese authorities. The interest rate differential between the US and Japan has been a major factor in the yen’s decline.

And there are indications that US interest rates are unlikely to fall anytime soon, which would mean the yen and other Asian currencies won’t see much relief.

Futures are pricing in fewer than two U.S. interest rate cuts this year, a long way from the six to seven discounted at the start of the year.

Several Fed speakers are set to speak in the coming days, which will provide investors with insight into the interest rate path.

(Reporting by Nimesh Vora; Editing by Savio D’Souza)

Disclaimer: This report is automatically generated by the Reuters news service. ThePrint is not responsible for its content.