Tuesday saw the Indian rupee gain strength due to a surge in Asian currencies and probable central bank assistance, while the dollar fell to its lowest level since November versus major rivals. The rupee was up 0.1% for the day, closing at 87.2125 versus the US dollar.
Due to pressure from dollar bids sparked by the maturity of holdings in the non-deliverable futures (NDF) market, the currency had fallen to 87.3850 earlier in the session. However, dealers indicated that its losses were lessened by the Reserve Bank of India’s likely involvement. Later in the session, the dollar’s decline helped the rupee.
While Asian currencies increased, led by the offshore Chinese yuan, which was up 0.4% on the day, the dollar index was down 0.5% at 103.3.
Along with a steep decline in U.S. stock prices, markets’ risk appetite has been weakened by uncertainty around trade tariffs and their effects on the country’s growth-inflation dynamic. A decrease in U.S. bond yields saw dollar-rupee forward premiums increase, with the 1-year implied yield increasing by much to 4 basis points to 2.20%.
Investors are currently awaiting the Wednesday publication of consumer inflation data from the US and India. Expectations of rate reduction by the central banks of the countries are anticipated to be influenced by the statistics.
