PSU bank selling, inflows from bonds help Indian rupee to recover sharply in afternoon trade

Indian Rupee

Indian rupee recovered sharply in the afternoon trade due to likely selling by the state-owned banks on behalf of the Reserve Bank of India (RBI) and inflows of dollar bonds issued by companies, currency experts said.

The local currency was trading at 86.38 against the US dollar at 2:00 pm, as compared to 86.64 against the greenback on the previous trading session. Indian rupee has touched a high of 86.3075 against the greenback, which was lowest in two days.

“There is a selling by a big public sector bank, possibly on behalf of the central bank. Direction is still on the upside unless 86 is breached. Also, buy/sell swaps are being done by RBI to ease the liquidity position. That has soothed the temperature to some extent,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.

Tata Capital has raised $400 million through the sale of US dollar-denominated bonds maturing in three-and-a-half years, the company said in a statement late on Tuesday.

Amit Pabari, managing director at CR Forex Advisors said Tata Capital bond issue flows has also helped Indian rupee to recover.

Indian rupee opened marginally down today due to easing dollar index and crude oil prices.

Dollar index, which tracks the greenback’s value against six major currencies, has eased to 109.09 in afternoon trade today, as compared to 109.273 in the previous trading session.

Oil prices were little changed on Wednesday, after falling the previous day, as a dip in US crude stockpiles and expectations of supply disruptions from sanctions on Russian tankers lent support amid forecasts for lower global fuel demand.

Brent crude futures were up 2 cents to $79.94 a barrel, after dropping 1.4% in the previous session.

Prices slipped on Tuesday after the US Energy Information Administration predicted oil will be under pressure over the next two years as supply should outpace demand.