MUMBAI: The Indian rupee dipped against the dollar, marking its sixth consecutive weekly loss following a persistent rise in Treasury yields.
On Friday, the rupee ended at 82.6750 as opposed to 82.7600 the previous day. Rupee fell by 0.4% over the course of the week. The local unit has decreased by around 4% over the past six weeks.
Without the Reserve Bank of India’s assistance, this week’s losses for the rupee would have been greater. The RBI actively intervened on Thursday as the rupee hit a record low of 83.29.
According to dealers, the intervention was made on a forward basis rather than a spot basis as has been the case recently. The RBI conducted buy/sell swaps and spot dollar sales mostly for December delivery.
Rupee forward premiums continued to decline as a result of the buy/sell swaps, rising Treasury yields, and stop losses on paid positions. The 1-year USD/INR implied rates decreased by 30 basis points on-week to below 2.25%.
The 1-year yields had decreased by 40 bps over the previous week. According to market participants, RBI’s inclination to sell dollars for delivery at a future date rather than on a spot basis may be fueled by the need to control rupee liquidity and prevent a drop in overall foreign exchange reserves.
Some analysts predicted that the rupee would continue to lose ground over the ensuing weeks before maybe turning around.
Vice President of commodity and currency research at Religare Broking Sugandha Sachdeva stated, “We expect rupee to weaken to 84 levels, but may see turnaround from that point.”
