Rupee touches near two-week high on broad dollar weakness
By Jaspreet Kalra
MUMBAI, Aug 19 (Reuters) -The Indian rupee rose to its highest level in nearly two weeks on Monday as the dollar index declined to its lowest level in six months, sparking broad gains in Asian currencies.
The rupee INR=IN was at 83.90 as of 11:10 a.m. IST, up about 0.05% compared with its previous close at 83.94 on Friday.
The local currency rose to 83.85 in early trading, its highest level since Aug. 6.
The dollar index fell 0.3% to 102.1, its lowest level since mid-January, as investors anticipated a dovish tilt emerging in the Federal Reserve's July policy meeting minutes, due on Wednesday, and Chair Jerome Powell's remarks later in the week.
"With US macro data showing disinflation and growth still largely resilient, Chair Powell could provide a stronger signal that the Fed will proceed with rate cuts at the September FOMC meeting," MUFG Bank said in a note.
Traders have fully priced in a 25-bps rate cut by the Fed at its September meeting, while resilient U.S. economic data slimmed hopes of a 50-bps cut. FEDWATCH
Despite gaining in early trading, the rupee lagged behind gains in Asian currencies, which were up by 0.3% to 1.5%. It has declined about 0.2% against the dollar over the last month, diverging from broad-based strength in its peer currencies.
Heightened dollar demand from local importers and outflows from equities have hurdled gains in the local currency, traders said.
Overseas investors have pulled out $2.5 billion from local stocks over August so far, according to stock depository data.
Unless there is a reversal in equity flows, the rupee is unlikely to gain above 83.80 given the strong dollar demand from importers over recent sessions, a foreign exchange trader at a private bank said.
Reporting by Jaspreet Kalra; Editing by Janane Venkatraman
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
