Rupee posts best opening in three weeks on likely RBI intervention

Indian Rupee today: The domestic currency opened 39 paise higher at 88.39 against the greenback on Tuesday

The Indian Rupee advanced after three straight days of losses on Tuesday on likely interventions by the Reserve Bank of India (RBI) amid an uptick in the dollar index. 

 

The domestic currency opened 39 paise higher at 88.39 against the greenback on Tuesday, the best opening since October 15 this year, according to Bloomberg. The Rupee pulled off from record levels on a likely intervention by the central bank, according to a Bloomberg report. 

 

The rupee slipped back toward 88.80 on Monday, the same zone it hovered around in early October, as the dollar’s strength left little breathing room for emerging market currencies, Amit Pabari, managing director at CR Forex Advisors. The global mood turned cautious once again, with hawkish signals from the US Federal Reserve and Washington’s latest trade deal with China reinforcing the dollar’s dominance, Pabari said. 

   

India’s manufacturing activity continued to expand in October, with the Manufacturing Purchasing Managers’ Index (PMI) rising to 59.2 from 57.7 in September, according to data compiled by S&P Global. The upturn was supported by strong domestic demand, goods and services tax (GST) relief measures, productivity gains, and higher technology investments.

 

In the near term, the rupee may continue to oscillate between 88.50 and 89.10, with the dollar’s global strength and ongoing trade uncertainties limiting upside, Pabari said. "Once the India-US trade deal is finalised and the pair breaks below the key 88.40 mark, we could see appreciation toward 87.70-87.50 levels."

 

There was no discussion on the India–US trade deal yesterday, keeping the rupee on the weaker side, Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said. 

 

The RBI reiterated its intent to defend the 88.80 level, Bhansali said. "Exporters are advised to sell dollars to avoid a repeat of October 16, when the RBI intervened and opened the rupee stronger at 88.26. Importers, meanwhile, can buy on dips for cash requirements while waiting to hedge, with a stop-loss near 88.90."

 

The dollar index advanced and was near a three-month high on reduced expectations of Fed rate cuts in December. The measure of the greenback against a basket of six major currencies was up 0.03 per cent at 99.90.

 

In commodities, crude oil prices were on the lower side with traders reacting to Opec+ pause in production hikes in the first quarter of the next year. Brent crude price was down 0.32 per cent at 64.68 per barrel, while WTI crude prices were higher by 0.34 per cent at 60.84 per barrel, as of 9:10 AM IST.