Rupee on Monday closed near 17-month high and its performance has blown a lot of currencies out of the water, including the king: the US dollar. With the Indian currency gaining strength, tourists will have to shell out less for travel and this looks like an ideal time to plan a foreign holiday.
On Thursday, dollar was fetching 6.8863 yuan at 11:09 a.m. HK/SIN in offshore trade. The pair had fallen as low as 6.8648 around 9:00 a.m. HK/SIN. On Wednesday, the dollar/yuan pair had its largest drop in a year in the offshore market, falling from as high as 6.9688 to as low as 6.8658.
The central bank bought USD 5.070 billion from the spot market and sold USD 4.220 billion in the reporting month - making it a net buyer of USD 850 million, RBI said in its monthly bulletin released today.
The US dollar index (USD) is poised to end 2015 with a more than 9 percent increase as expectations for the Federal Reserve to begin a tightening cycle boosted buying in the months leading up to the central bank's historic December meeting.
Late on Friday, the China Foreign Exchange Trade System (CFETS), a sub-institutional organization of the People's Bank of China (PBOC), introduced a new exchange rate index that will see the yuan (CNY), or renminbi, valued against a basket of 13 trade-weighted currencies.
The rupee resumed lower by 66.80 per dollar from yesterday's closing level of 66.71 at the Interbank Foreign Exchange Market.
Sluggish trade data amid highly volatile global currency market sentiment in the aftermath of China's yuan devaluation predominantly weighed on trade, forex dealers said. Besides, fresh bouts of selling in local equities added pressure on the local currency.
Fresh foreign capital inflows into equity market also boosted the rupee value against the dollar, a forex dealer said. They bought shares worth Rs 350.41 crore yesterday as per the provisional figure issued by stock exchanges.
While the year so-far has not fared very well for the Indian rupee, Nizam Idris, head-EM Forex Strategy, Macquarie, says the rupee may see levels of 63.5 against the dollar by Q3.
After a two-month hiatus, the dollar rally looks set to resume and it could be powerful.
The rupee, Dominic Bunning, associate - FX Strategy, HSBC, says is expected to be one of the bet performers in the emerging market (EM) basket.
Analysts say the trend for a weaker yen, which is down roughly 13 percent versus the dollar so far this year, remains intact given the outlook for continued aggressive monetary easing in Japan.
The optimism stems from the reduced volatility in the market since the RBI intervention, though the rupee ended the week beginning Tuesday with a loss of 4 paise at 59.35 to the greenback.
On the back of the free falling rupee against the US dollar, the Reserve Bank of India (RBI) is expected to contain the rate of inflation with top priority. However, the inflation has come off sequentially, though not reached the central bank‘s comfort zone.
RBI proposed to slap incremental provisions and capital requirements on banks, which lend to corporates having unhedged foreign currency exposures. In the wake of increased exchange rate volatility, some Indian companies are likely to incur losses due to their un-hedged foreign currency exposures.
The Reserve Bank of India (RBI) is unlikely to reduce the policy (repo) rate in its mid quarter monetary policy to be announced on June 17. The depreciating rupee would be the key trigger behind such action. The fear of imported inflation may resist the central bank from taking any dovish stance.
The dollar index, a measure of the dollar's value against currencies of the United States' major trading partners, last week hit its highest level in almost three years at 84.50. It held near that peak on Wednesday, a day after strong US data lifted the blue-chip Dow Jones Industrial Average to a record high.
The yen rallied on Tuesday, snapping a three-day decline against the dollar and euro as it neared 100 to the dollar, while a fall in Chinese inflation and expectations for modest growth in U.S. corporate earnings helped stocks.
Mecklai graph of the day - Last week, US dollar weakened across the board amid poor economic batch of data that released during the week and strength in equities due to better corporate earnings.
The Indian rupee today hit its lifetime low of 52.84/85 against the dollar as demand for the US currency soared amid signs of FIIs pulling out money in the wake negative growth in industrial production in October.
The rupee has been hogging all the headlines this week. On Tuesday, it broke past its previous all-time low of 52.19 against the dollar to hit 52.72, a new lifetime low.
Sushil Kedia of ATMA joins CNBC-TV18 to give his perspective on the technical charts for the market today.
The rupee dived to its lowest in over 5 weeks as the slump in global equities was mirrored in local shares, sparking fears of foreign fund outflows.