Due to the Chinese yuan’s decline and importers’ aggressive dollar buys, which were probably connected to month-end payments, the rupee fell to yet another all-time low on Monday, according to FX traders. The decrease was, however, restrained by dollar sales made by the state-owned banks acting on behalf of the Reserve Bank of India.
After closing at 85.10 on Friday, the rupee ended the day at 85.12 versus the US dollar. At 7.30, the offshore Chinese yuan fell 0.2%.
Investor confidence was also impacted by the little increase in crude oil prices. In futures trading, Brent crude increased by 0.07% to $72.99 a barrel.
The dollar index, which compares the value of the US dollar to a basket of six other currencies, was up 0.38% at 107.75. The hawkish adjustment in the Federal Reserve’s projection for policy rates over 2025 has traders anticipating that the index will stay high for some time.
State-owned banks reportedly engaged in mid-tenure dollar-rupee buy/sell swaps, according to forex traders. The RBI has increased its forward dollar sales to lessen the effect of spot market interventions on foreign currency reserves and banking sector liquidity.
The one-year indicated yield increased 2 basis points to 2.24% on Monday, while the one-month forward premiums increased to 20 paise, indicating a rise in dollar-rupee forward premiums.
