The greenback, which has appreciated against major currencies since the Fed raised rates on Wednesday, rose further as the dollar index hit a 20-year high. In the UK, the biggest tax cuts since 1972 sent sterling and government bonds plummeting. The pound has fallen more than 3% against the dollar to levels not seen 37 years ago.
The rupee ended the week down 1.6%, the worst weekly decline since April 9, 2021. The dollar was trading above 81 in the early morning hours. However, the second half saw significant sales, which dealers said could have been made on behalf of the central bank. The Rupee finally closed at 80.99 – 12 paise lower than Thursday’s close at 80.87.
“The Rupee rose to a high of 81.23 in early trade followed by RBI intervention which took it to 80.76. But the spot climbed to close at 80.99 due to a negative undercurrent in the rupee,” said KN Dey of United Financial Consultants. .
Dealers said the combined RBI intervention in the spot and futures markets would be well over $100 billion. Although the number is high, dealers said it was reasonable given the volatility. With the conflict in Ukraine likely to escalate, no one is ready to say that the worst is behind us for the currency.
Dey said the RBI’s intervention could be to control any speculation in the market. “The pressure on the rupiah would continue for some time yet. With fundamentals in India being good, we may not see a big depreciation. next few months, that is until the end of December,” he said. With the RBI’s monetary policy committee decision a week away, uncertainty in the foreign exchange markets is likely to persist.
“Most currencies are under pressure as the dollar continues to strengthen. Yen volatility remained high after the Bank of Japan intervened to curb a sharp depreciation. The Bank of England released its policy statement and raised rates by 50 basis points (100 basis points = 1 We expect the rupee-dollar to trade sideways and trade between 80.40 and 81.20,” said forex analyst Gaurang Somaiya and bullion at Motilal Oswal Financial Services.
You Can Read Also