Rupee breaches 83 mark for first time against dollar
After remaining range bound since last Monday, rupee fell drastically against the US dollar on Wednesday and closed to life-time low above 83-mark.
Published: 20th October 2022 07:44 AM | Last Updated: 20th October 2022 07:44 AM | A+A A-
NEW DELHI: After remaining range bound since last Monday, the rupee fell drastically against the US dollar on Wednesday and closed to a lifetime low above the 83-mark. The fall comes as US bond yields surged sharply on Wednesday, resulting in most Asian currencies getting weaker and hitting fresh lows (in terms of value) against the greenback.
The rupee closed at 83.02 per US dollar compared with the previous close of 82.36 per dollar. The rupee has shed over 11 per cent against the US currency so far in 2022.
“Flurry of buy orders from inter-bank dealers and speculators due to massive short covering pushed the market higher. It seems the central bank was not that visibly active and that caused prices to rise sharply. Global cues were USD positive as risk-off sentiments, the strong dollar index, weak Asian currencies and surging US bond yields, all coupled to push USD-INR higher,” said Anindya Banerjee, VP-currency derivatives & interest rate derivatives at Kotak Securities.
The 10-year US yield rose to 4.08 per cent on Wednesday during Asian trading hours, as markets brace for another round of aggressive rate hikes from the Federal Reserve in November and December. Other central banks are expected to go for aggressive rate hikes to tame inflation. The dollar index, which gauges the greenback’s strength against a basket of six currencies, advanced 0.31 per cent to 112.48.
The index gained significantly from the falling pound sterling value after inflation in the UK accelerated to a 40-year high in September. Banerjee of Kotak Securities expects USD-INR to trade with a positive bias, within a range of 82.70 and 83.50 levels in near future. Rahul Kalantri, VP of Commodities, Mehta Equities, however, expects the rupee will show some weakness in the coming days and see 84-level soon.
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RBI’s less aggressive stance to support the rupee by selling the dollar in the open market comes over a week after the central bank is believed to have intervened regularly in keeping the rupee at around 82.40 levels. The rupee on October 7 had breached the 82/USD mark for the first time.
“With possibly the RBI buying dollars in currency futures yesterday indicating things to come, it was only time when 82.40 would have been breached. So no level seems to be sacrosanct for the rupee, and therefore 83.50 should be the next target once 83.00 is breached,” said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors.