Rupee weakens 18 paise as foreign banks buy dollars, Asian currencies slip

The rupee fell to 84.44 against the dollar as foreign banks stocked up on greenbacks and Asian currencies weakened, with losses capped by a dip in the dollar index

The rupee settled 18 paisa weaker against the US dollar on Tuesday on dollar bids by foreign banks and a fall in Asian peers, said dealers. The local currency depreciated up to 84.64 per dollar during the day, however, the loss was limited due to decline in dollar index.

 

The rupee settled at 84.44 per dollar, against the previous close of 84.26 per dollar. While it has appreciated by 1.21 per cent in the current financial year so far, the domestic unit has seen 1.39 per cent appreciation in the current calendar year.

 

“Foreign banks were buying dollars and Yuan was also down. We did not see much depreciation because the dollar index was down due to the Federal Reserve meeting,” said a dealer at a state-owned bank. 

 

 

The dollar index was down 0.1 per cent to 99.7 on Tuesday. It measures the strength of the greenback against a basket of six major currencies.

 

According to market participants, the Reserve Bank of India (RBI) likely squared off its short dollar position which led to the initial decline in the rupee.

 

“The Indian Rupee was again sold off at 84.26 levels today with RBI seemingly squaring its short positions in USD/INR as it moved lower to 84.64, but was again bought and finished the day at 84.40,” said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.

 

Following a five-month streak of rising net short dollar positions in the forwards book of the RBI through February, the central bank has been trimming some of its dollar exposure in March. RBI data showed that the net short dollar position in its forward book up to one year stood at $64.2 billion by the end of March, against $88.7 billion at the end of February.