Published 15:47 IST, May 9th 2024
Rupee ends flat as dollar demand from foreign banks offsets early gains
Ending at 83.5075 against the US dollar, the rupee maintained its proximity to the previous day's close of 83.5175.
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The rupee closed with minimal change on Thursday, mirroring subdued movements seen in most Asian currencies. Dollar demand from custodian banks dampened the local unit's initial uptick, resulting in a marginal finish for the day.
Ending at 83.5075 against the US dollar, the rupee maintained its proximity to the previous day's close of 83.5175. Despite hitting a high of 83.4475 early in the trading session, the currency relinquished some of its gains thereafter.
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The dollar index saw an increase of 0.2 per cent to 105.7, with Asian currencies displaying muted performance, except for the Korean won, which weakened by 0.4 per cent.
While mild inflows initially supported the rupee's ascent, demand for dollars from importers and two major foreign banks, likely acting on behalf of custodial clients, tempered the currency's rise, as highlighted by a foreign exchange salesperson at a private bank.
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Trading dynamics throughout the week have been characterised by the rupee's limited movements, influenced by persistent local demand for dollars, counterbalanced by modest offerings from state-run banks, potentially acting on behalf of the Reserve Bank of India.
The one-month realised volatility of the rupee has declined to approximately 2 per cent, following a spike to a nearly six-month high of 2.79 per cent on April 19, coinciding with the rupee's descent to its all-time low of 83.5750.
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Abhilash Koikkara, head of forex and rates at Nuvama Professional Clients Group, expressed optimism regarding the rupee's trajectory, suggesting a potential upward movement in the near term if support at 83.55 is sustained.
With no significant US economic data released this week, attention has primarily centered on statements from Federal Reserve policymakers. Recent speeches have maintained the possibility of monetary easing later in the year, contingent upon greater confidence in inflation converging sustainably towards the 2 per cent target before any rate cuts are implemented.
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(With Reuters inputs)
15:47 IST, May 9th 2024