Oil’s climb to $100 pushes rupee lower
The central bank was likely selling dollars, but not very aggressively, as the pressure stemmed from an external event rather than speculation, traders said.
The currency traded between 94.51 and 94.89 on Tuesday, with the Reserve Bank of India (RBI) selling dollars at the weaker level, likely protecting the rupee from deprecating past 94.90 per dollar.
“There was a strengthening bias initially, but later the rupee started depreciating as oil prices rose to a high and dollar demand from oil companies hit markets. The RBI continued to intervene through state-run banks around the 94.89 level, limiting the extent of the rupee’s depreciation,” said Anil Bhansali, head of treasury at Finrex Treasury Advisors.
Other emerging market currencies came under pressure on Tuesday as well, with both the Thai baht and South African Rand slipping about 0.4%, according to Reuters.
Rupee is expected to trade between 94.50 and 95.25 on Wednesday.
