Indian rupee snaps three-day winning streak tracking weak Asian peers

The rupee settled at Rs 83.57 per dollar on Wednesday, against Rs 83.43 per dollar on Tuesday

The rupee snapped a three-session winning streak on Wednesday as weakness across regional peers and month-end dollar demand from oil importers weighed on the Indian currency, dealers said.

The rupee settled at 83.57 to the dollar on Wednesday, down from 83.43 in the previous session.

“The local currency was pushed down by a significant rise in crude prices, which have increased by more than 12 per cent this month in June. Additionally, the dollar index has been rising due to the Federal Reserve’s comments on holding back on rate cuts given the mixed economic data. The rupee is expected to trade within a range of 83.45 to 83.65,” said Jateen Trivedi, vice-president, research analyst (commodity and currency) at LKP Securities.

Market participants said the rupee reversed some losses by the end of the trade on the back of short covering.

The Indian unit hit a record low of 83.64 against the US dollar on June 20.

The US dollar index climbed to 105.85, buoyed by hawkish remarks from Federal Reserve officials, while the Euro buckled under the weight of declining consumer confidence.

Fed governor Michelle Bowman indicated it would keep interest rates steady for some time to combat high inflation, with no cuts expected this year.

Bowman suggested rates could even be raised if necessary.

A Fed president conveyed a similar hawkish stance. The markets now turns its attention to Friday’s Personal Consumption Expenditures Price Index data, which will reveal if the recent slowdown in inflation persists. Additionally, the upcoming US presidential debate is expected to draw significant interest.

“As the dollar index rose and the Chinese yuan fell, the Indian rupee was down, though it closed near 83.57 per dollar as traders who were selling the greenback till yesterday did a short covering and bought back the dollar again. There was also month-end buying of dollars from oil companies taking it higher,” said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP.