Rupee: the rupee ends lower; fall in exporters’ dollar sales cushion

NEW DELHI: The rupee weakened against the US dollar on Thursday, but managed to regain a foothold after falling sharply earlier today, with exporters preferring to block dollar sales as the Indian currency may not suffer more hits after the heavy losses suffered so far in the week, dealers said.

The rupee stood at 74.2250 to the US dollar on Thursday against 74.1475 on Wednesday. The national currency had opened at 74.2600 to the dollar.

At the start of trading, the rupee had weakened to 74.3525 per dollar due to the global strengthening of the greenback, as reflected in the Dollar Index, which was at 94.36 around 3:30 p.m. (IST).

Earlier this week, the Dollar Index, which measures the strength or weakness of the greenback against six major currencies, was at 93.38.

The US dollar has strengthened significantly around the world in the past few days after the US Federal Reserve announced an earlier than expected withdrawal of the extraordinary quantitative easing it initiated at the start of the Covid pandemic. 19.

Yields on US government bonds soared in response to the Fed’s policy statement, with 10-year US Treasuries surging more than 21 basis points in one month.

Higher yields on US Treasuries decrease the attractiveness of assets in emerging markets, such as India, and can lead to a potential reversal of foreign flows from markets.

Some dealers attributed the sharp drop in the rupee in early trading to the sale of UK-based Standard Life’s stake in HDFC AMC.

Around the second half of Thursday’s trading, however, the rupee managed to recover from the 74.30 per dollar level due to corporate dollar sales, dealers said.

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