Indian rupee edges higher on exporter-led dollar selling
The Indian rupee made marginal gains on Wednesday, despite a jump in crude prices, as exporters sold dollars after the U.S. currency pulled back from a recent high overnight.
The partially convertible rupee closed up 0.1% to 79.8075 after trading near the same level all day, shaking off the threat from oil prices climbing back to $100 per barrel.
Elevated crude prices risk adding to inflationary pressures in India as the country is a major oil importer.
Compared to its Asian peers that have weakened versus the greenback this week, the rupee has been trading in a tight range and not dropped below 80-levels ahead of the U.S. Federal Reserve’s Jackson Hole gathering, helped by foreign inflows and dollar sales by exporters, analysts said.
“The Reserve Bank of India’s tolerance for volatility in the rupee has also helped,” said Garima Kapoor, economist and senior vice president at Elara Capital.
The Indian central bank’s foreign exchange reserves have depleted by around $60 billion this year.
The dollar index was flat after retreating from a mid-July high on Tuesday after soft data on private sector activity made investors reassess just how hawkish the Fed was going to be.
Before the U.S. central bank meets next month for a policy meeting, it will host the Jackson Hole economic symposium starting Thursday, with investor focus on any commentary about the Fed’s rate hike path.
Indian stock markets closed up 0.2% after another volatile session. However, foreign outflows seem to have stabilized for now after an exodus of $28 billion worth of outflows in the first half of the year.
So far in August, foreign investor inflows into equities have crossed more than $5 billion. (Reporting by Anushka Trivedi and Nimesh Vora; Editing by Shounak Dasgupta)
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