Rupee drops as corporates rush to buy dollars, India CPI awaited
MUMBAI — The Indian rupee reversed early gains to end weaker on Monday due to dollar demand from corporates, with cautionary words on U.S. inflation from a Federal Reserve official keeping the greenback firm.
The partially convertible rupee eased 0.58% to 81.26 per U.S. dollar, having opened at 80.52. The currency had risen 1.2% over the past two sessions, with Friday’s gains the biggest intraday move in almost four years.
That rally was quite “overdone,” said a trader with a private bank, who expects the rupee to mostly hover around 81/USD, with 80.5 being a “good level” for importers to buy dollars.
Meanwhile, the sharp fall in the rupee after a firm opening on Monday was likely due to a large Indian conglomerate purchasing dollars, said traders, along with mid-month greenback demand by oil and defense companies.
The dollar index climbed 0.5% to 106.85, having shed 1.8% on Friday to hit a near three-month low after a slightly cooler-than-expected inflation data last week sent the greenback into a tailspin.
It got some support from Fed Board Governor Christopher Waller saying on Sunday that a host of other similar readings would be needed to show convincingly that inflation was easing.
However, he did add that the central bank could start thinking about hiking at a slower pace.
Asian currencies mostly weakened after a two-day rally, while equities were mixed even as the Chinese yuan climbed 0.6% on reports of policy support for the country’s battered property sector.
Eyes will be on India’s October inflation figures due later in the day, which is expected to be at 6.73% as per a Reuters poll, but miss the Reserve Bank of India’s target range yet again. (Reporting by Anushka Trivedi in Mumbai; Editing by Dhanya Ann Thoppil)
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