The Indian Rupee advanced close to a two-month apex against the U.S. dollar this Monday, propelled by dollar offerings from international banks, as observed by market participants.
Date: July 03, 2023
Place: New Delhi, India
The Rupee stood at 81.8175 per U.S. dollar by 11:16 IST, marking an increase from the previous session’s rate of 82.0375. The national currency soared to 81.76, its greatest value since May 8.
A significant volume of dollar sales by foreign banks has been observed since the market’s opening, reported a proprietary trader from a privately owned bank.
Speculations about debt influx due to a sizable conglomerate circulated, alongside the typical equity inflows, the trader further commented.
Despite the incoming capital, the USD/INR pair indicates a persistent dollar buying interest around 81.75-81.80, triggering discussions about potential intervention by the Reserve Bank of India (RBI).
The RBI’s probable involvement is indicated by the price action, another trader suggested.
“However, there will naturally be significant buying interest at these rates from importers,” the trader mentioned.
The Rupee’s ascend was also facilitated by the uplifting trend seen among its Asian counterparts and equity markets. The dollar index experienced a slight dip, while the offshore Chinese yuan escalated to 7.2524 following a marginally better-than-projected Caixin manufacturing PMI score.
This week’s focal point rests on several critical U.S. data releases. The ISM U.S. manufacturing report is due later today, with the service sector report slated for Wednesday.
Key indicators like U.S. private payrolls, unemployment claims, and non-farm payrolls from Wednesday to Friday will give insights into the durability of the job market.
Data from last Friday suggested that core price pressures in the U.S. remain consistent. Discounting the unstable food and energy segments, the PCE price index rose by 0.3%, aligning with forecasts.
Despite higher U.S. yields, the rupee forward premiums saw a slight increase, with the 1-year implied yield at 1.71%.”
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