The all-time intraday trading low for the rupee is 83.29 per US dollar.
While the rupee has been weakening against the US dollar over the past weeks, the depreciation in the Indian currency has been far more contained than in the previous year. This year, the rupee has shed 0.6% versus the dollar. In 2022, it had depreciated by about 10% versus the greenback.
On Monday, crude oil prices rose for the third consecutive trading day, with Brent futures jumping 0.8% to $94.64 per barrel, Reuters reported, adding that the prices of the benchmark contracts had risen for three straight weeks to touch their highest levels since November.
Global oil prices have risen due to supply cuts by major oil producers Saudi Arabia and Russia, along with renewed demand from China.
“Effectively, we are going into the US Fed policy meeting and oil prices are trending up,” said Rahul Bajoria, managing director and head of EM Asia (ex-China) Economics, Barclays. “There are signs of China data stabilising, which is not a negative for India but from an FII flow perspective may lead to a recycling of assets away from India. All of these factors are adding up.”
While the RBI was said to have been intervening through dollar sales in the currency market on Monday, the central bank may not have stepped in too aggressively, given that the rupee’s weakness was brought about by global factors and was in line with its Asian peers.Kotak Securities’ VP for currency derivatives, Anindya Banerjee, estimated RBI’s dollar sales at $200-300 million on Monday. The RBI’s stated position is that it intervenes in currency market to prevent excessive volatility in rupee’s exchange rate and not to target a particular level. With Tuesday being a trading holiday for the Indian currency market, traders preferred to pare exposure to emerging market units, especially given that the crucial Federal Reserve meeting is lined up on September 19-20.
“This week will remain highly volatile following central bank policy rate meetings across the developed and EM economies. The baseline of it is the dollar to hold onto its strength through the week,” HDFC Securities research analyst Dilip Parmar said.
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