The rupee hovered at over three-week highs in Monday’s deals as the domestic currency was trading at 79.11 against the US dollar, its strongest since July 7 and higher than Friday’s close of 79.25. Meanwhile, the yield on India’s 10-year paper was 7.27% compared to Friday’s close of 7.31%.
Forex traders told PTI that the rupee opened stronger as the dollar continued to fall on account of a less aggressive US Fed and falling crude oil prices. The market also awaits the Reserve Bank of India’s (RBI) Monetary Policy Committer (MPC) meeting outcome to give its rate signals on Friday, August 5, 2022.
Weakness in oil prices also propped up the Indian rupee as bleak manufacturing data from China and Japan for the month of July clouded the outlook for fuel demand.
So far, in CY22, the Indian currency has fallen by 6.6% against the USD, even some Asian currencies have seen a steeper fall against the US dollar than the rupee.
The currency crossed the 80 level last month on the back of monetary policy tightening and the consequent FPI outflows from capital markets. India’s widening trade gap and capital outflows have also raised the risks for the domestic currency.
Foreign Portfolio Investors (FPIs) had been selling equities in the Indian markets for the past nine-to-ten months barring the latest buying due to various reasons, including tightening of monetary policy in advanced economies, and rising dollar and bond yields in the US.
Foreign investors returned to Indian equities in July, buying $618.05 million worth of shares, which marked the first monthly inflow of funds since September 2021, according to Refinitiv data.
(With inputs from agencies)
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