Rupee reverses losses, ends flat at 87.2 per dollar on likely RBI support

The rupee reversed its losses by the end of trade on Thursday to settle almost flat against the greenback at 87.20 per dollar. The Reserve Bank of India (RBI) likely intervened in the foreign exchange market via dollar sales in the latter half of the day, said dealers.

 

The rupee opened six paise weaker against the greenback, tracking the rise in the dollar index. It touched the day’s low of 87.41 per dollar before appreciating up to 87.11 per dollar on the back of aggressive dollar sales by state-owned banks, said dealers.

 

“The rupee was trading weaker before the RBI’s intervention,” said a dealer at a state-owned bank. “This has been the case; RBI has been trying to curb any one-sided movement,” he added.

 

 

The rupee has depreciated by 4.35 per cent in the current financial year, whereas the current calendar year has witnessed 1.82 per cent depreciation.

 

On Wednesday, US President Donald Trump revived hopes for a potential one-month delay on new tariffs for imports from Mexico and Canada, suggesting that they could be implemented as early as April 2.

 

The dollar index rose to 106.62 on Thursday against the previous close of 106.42. It measures the strength of the greenback against a basket of six major currencies.

 

“Besides tariffs, we have a lot of data coming, which will give cues,” said a dealer at a private bank. “The dollar index movement is what we are looking at right now,” he added.

 

On Thursday, the US will release data on initial jobless claims, pending home sales, and provisional third-quarter GDP growth. On Friday, the core PCE price index will be reported.

 

The rupee on Tuesday recorded its steepest single-day decline in more than three weeks, slipping by 50 paise against the dollar.

 

Traders also eye the $10 billion buy/sell swap for a tenure of three years scheduled tomorrow (February 28). This will be the second swap auction by the central bank after it infused $5 billion via a six-month swap on January 31.