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- Rupee opens 11 paise up at 74.93 against dollar
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- Rupee settles 3 paise down at 75.04 against US dollar
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- Rupee slips below 75/$ mark; settles 20 paise down against US dollar
In the past one month, the dollar index — which measures the dollar against major world currencies — dropped more than 4%, show data from Bloomberg. In this period, the rupee’s value against the greenback has increased just about 1%.
At the interbank forex market, the rupee opened at 74.74, and witnessed an intra-day high of 74.68 during the session and a low of 74.90 against the US dollar.
The dollar declined to two-year lows on Friday and is on track to post its biggest monthly decline in 10 years.
The country's foreign exchange reserves rose to a lifetime high of $517.64 billion in the week ended July 17, 2020 from $476.88 billion at end-March 2020.
The domestic unit finally closed at 74.84 against the greenback, down 4 paise over its previous close 74.80.
At the interbank forex market, the rupee opened at 74.84, then lost further ground and touched 74.87 against the US dollar, down 7 paise over its last close of 74.80.
The dollar has been tumbling on expectations that the Fed will continue its ultra loose monetary policy for years to come and on speculation that it will allow inflation to run higher than it has previously indicated before raising interest rates.
During the session, the domestic unit touched an intra-day high of 74.73 and a low of 74.89 against the American currency.
While that view is clearly still a minority one in most financial circles -- and the Goldman analysts don’t say they believe it will necessarily happen -- it captures a nervous vibe that has infiltrated the market this month: Investors worried that this money-printing will trigger inflation in years ahead have been bailing out of the dollar and piling furiously into gold.
The U.S. Federal Reserve is also expected to strike a dovish stance at its policy review later in the day and dollar bears bet it could even hint at further easing down the road.
The dollar index against a basket of currencies rebounded by 0.18% to 93.71, after dropping to 93.47 on Monday, the lowest since June 2018.
At the interbank forex market, the rupee witnessed high volatility and touched an intra-day high of 74.71 and a low of 74.90 against the US dollar.
Before closing almost flat at 74.83 against the dollar, rupee traded in a narrow range despite marginally weak domestic equities.
The U.S. currency's drop has put a rocket under gold prices and has the yen standing near its highest in four months, the euro just below a 22-month high and the kiwi close to its strongest since January.
The agreement signed under the SAARC Currency Swap Framework 2019-22 would be valid till November 13, 2022.
“The dollar’s strength is well and truly over for now,” said George Boubouras, head of research at hedge fund K2 Asset Management.
At the interbank forex market, the domestic unit opened on a strong note at 74.70, but erased the gains to finally close at 74.83, unchanged from its previous closing.
Market participants will be keeping an eye on the FOMC policy statement and a dovish commentary could further weigh on the greenback in the next few sessions.
In morning trade it fell to a four-month low against the yen and a new 22-month trough on the euro at $1.1699.
The dollar posted its biggest weekly decline in almost four months against a basket of currencies and also saw its largest weekly percentage loss against a surging euro since late March.
The reserves had crossed the half-a-trillion mark for the first time in the week ended June 5, after it had increased by $8.223 billion to reach $501.703 billion.
During the session, the domestic unit touched an intra-day high of 74.80 and a low of 74.98 against the US dollar.
The rupee on Thursday gave up day’s gains to settle on a flat note at 74.75 against the US dollar amid concerns over growing tensions between the US and China.
While the consensus among economists earlier was that India would contract by around 5% in 2020-21, this appears to be moving to a ballpark of 7-9%. So, going by the somewhat popular notion that the exchange rate is a measure of the health of the economy, why should the rupee be so strong?
The yen rose 0.3% to 106.51, its strongest since late June. The Australian and New Zealand dollars were also off from multi-month highs and the Chinese yuan struggled for headway.
At the interbank forex market, the domestic unit opened on a strong note at 74.65, but erased the gains and finally closed at 74.75, unchanged from its previous closing.
The local unit pared its initial gains and settled on a flat note at 74.76 against, Rupee had opened higher but it came under pressure in the latter half of the session following weakness in domestic equities.
"The market is still trying to ascertain whether this increase in geopolitical tension is going to be enough to derail the positive vibes we've been seeing," said Rodrigo Catril, senior FX strategist at National Australia Bank in Sydney.
Risk appetite in currency markets, however, diminished for around two hours, after China's foreign ministry said the United States had told China on July 21 to close its consulate in Houston.
The move marked a deterioration in U.S.-China relations, which have become more fraught since the outbreak of COVID-19.
During the session, the domestic unit witnessed high volatility and saw an intra-day high of 74.59 and a low of 74.87 against the American currency.
At the interbank forex market, the domestic unit opened at 74.61 against US dollar, gained further ground and touched 74.59 against the US dollar.
"You could say the dollar is weaker due to a risk-on move," said Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors in Sydney.
The present forex reserves are sufficient to cover 14.9 months of imports, which are around 20 per cent of GDP, said the report, adding pre-Covid, the import cover was 11.4 months.
At the interbank forex market, the domestic unit opened on a strong note at 74.79 against US dollar.
“In the last few sessions, riskier assets have witnessed rally on the back of progress over vaccine and expectation of stimulus package from the US and the Eurozone,” brokerage Motilal Oswal Financial Services said.