Rupee stays rangebound on RBI’s continued support


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MUMBAI — The Indian rupee ended little changed on Tuesday on the Reserve Bank of India’s likely interventions amid risk aversion stemming from U.S. rate hike fears and escalating geopolitical tensions.

The rupee closed at 82.3125, compared to its previous close of 82.32, while Asian currencies notched big losses after Russia fired missiles into Ukraine and as rising bets of a big U.S. Federal Reserve rate hike fueled gains in the dollar.

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The rupee traded in a narrow 9 paisa range all day. Traders said the country’s central bank likely sold dollars via state-run banks and conducted buy/sell swaps to limit the rupee’s losses.

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“The RBI is trying to protect the 82.40-per-dollar level, otherwise it would’ve been at 82.80,” said Sajal Gupta, head of forex and rates at Edelweiss Securities.

The intervention is a way to protect inflation from rising in the country, Gupta said.

A weaker currency results in imported inflation through the purchase of goods at higher prices.

Market participants were unsure how long the RBI could keep intervening, as they see high chances of the rupee weakening to 83, and even breaching it, by the Fed meeting next month.

Meanwhile, a foreign bank trader said some bankers were taking positions ahead of anticipated inflows sometime this week as a result of the 5G spectrum auction, which was helping the rupee.

India’s $19 billion 5G auction concluded in August, with Reliance Industries emerging as the biggest spender. The government had aimed to begin its rollout by this month and payments were supposed to be received in installments.

Mirroring the risk aversion in the markets, Indian stocks plunged 1.2%. Foreign portfolio inflows have been stalling since a surge in August and have not protected the rupee as much as local investors had hoped. (Reporting by Anushka Trivedi in Mumbai; Editing by Savio D’Souza)


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