Rupee report: Capital inflows keep rupee stable
IN the local currency market, trading operation last week were three sessions on account of two-day public holiday being October 11-12, on the occasion of Ashura.
With the country’s forex reserves at a historic high of $24.5bn, the week remained almost flooded with capital inflows, enabling the rupee to show a stable trend amid low demand for dollar and the premium for dollar indicated an easy trend du to lack of market movement in early session.
The rupee, however, suffered weekend losses against the dollar on rise in demand towards closing sessions. In the international market, however, the dollar hit an 11-week high in European trade during as investors upped their bets on the Federal Reserve, raising the US interest rates before the end of the year, with growing doubts over Donald Trump’s ability of being elected.
Sterling — currently trading at its worst level since 2010 — continued to depreciate before recovering weekend losses. The British pound has lost more than 4pc of its value against the dollar.
Meanwhile, on the domestic interbank market, the rupee/dollar parity remained unchanged over the previous weekend levels, trading flatly at Rs104.64 and Rs104.65 in the first trading session.
The rupee remained steady because of insignificant demand by the corporate sector ahead of the holiday. However, as trading resumed on October 13, dollar demand predominantly weighed on rupee trade.
The dollar edged up to Rs104.68 and Rs104.70 in domestic trade as the rupee lost four paisas on the buying, and five paisas on the selling counter against the dollar. In overseas trade, the dollar tumbled from a seven-month high as risk appetite took a turn for the worse after soft Chinese trade data spooked the market that is expecting the Federal Reserve’s interest rate increased by year-end.
The rupee downslide continued against the dollar for the second day in the last session. It lost five paisas on the buying, and four paisas on the selling counter — a cumulative loss of nine paisas — before closing the week at Rs104.73 and Rs104.74, hitting its lowest level in October so far.