Rupee reverses course after reaching two-mth high on RBI intervention

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The rupee last traded at 81.39 to the dollar, down from 81.12 in the previous session. The local currency had reached 80.86 on the interbank order comparison system immediately after the opening, the highest level since December 1.

“It was the RBI that came in to buy dollars and then it was the oil companies,” said Anil Bhansali, head of treasury at Finrex Treasury Advisors.

As it did back in November, the RBI has managed to stop the upward momentum on the rupee, said a trader at a private bank, who did not wish to be identified. It should now be clear that, at least for now, the RBI is not comfortable with the rupee above 81.

The RBI’s dollar purchases and the decline in the dollar index helped Indian reserves rise to $572 billion, the highest level since early August. This compares to printing a level of nearly $525 billion around mid-October.

The rupee at the opening was helped by the fall of the dollar index to below 102. Positive risk sentiment combined with expectations of milder US Federal Reserve rate hikes dampened demand for the greenback.

A string of weak US data releases and a softer than expected inflation reading boosted confidence that the Fed is close to ending its rate hike cycle.

Estimates of US manufacturing and service PMI (Purchasing Managers’ Index) and GDP for the December quarter will provide investors with more insight into how the world’s largest economy is faring. the world.

(Reporting by Nimesh Vora; Editing by Janane Venkatraman)

By Nimesh Vora

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