RBI suspected to buy dollars to prevent appreciation

indica News Bureau-

The continued fall of the Indian Rupee against the US dollar becomes a worry for India. On Thu., Dec. 12, the rupee closed at 70.83, the lowest of the season as compared to 70.51 in September.

Crude oil prices gaining more than 1 percent to USD 65.19 per barrel hit the rupee sentiment.

Oil prices steadied on Thursday with the market mood switching to relief as OPEC forecast a supply deficit next year, from doom and gloom over data showing a surprise increase in US crude inventories.

The dollar nursed its steepest losses in weeks on Thursday, after the US Federal Reserve’s benign inflation outlook hosed down expectations for a rate hike anytime soon, pushing Treasury yields lower.

A report published in Deccan Herald via Reuters revealed that the Reserve Bank of India is suspected of buying dollars in the market via state-run banks to prevent appreciation in the rupee above the 70.50-per-dollar level. Four traders made this statement on Friday.

According to CR Forex Advisers, persistent dollar sales by foreign banks and inflows ahead of Bharat Bond ETF will keep the rupee stable to stronger. But likely dollar buying by some public sector companies and intervention by the Reserve Bank of India may cap gains near 70.40/50 levels.

A report published by Mint said that the 10-year bond yield was at 6.758 percent compared with its previous close of 6.763 percent.

In the year so far, the rupee has weakened 1.27 percent, while foreign investors have bought nearly $13.31 billion in Indian equities and $3.93 billion in debt during the period.

Other Asian currencies also traded higher. The South Korean won was up 0.7 percent, Taiwan dollar 0.5 percent, Philippines peso 0.3 percent, Malaysian ringgit 0.25 percent, Thai Baht 0.1 percent, China Renminbi 0.1 percent, Singapore dollar 0.1 percent, and dollar 0.07 percent.

The dollar index, which measures the US currency’s strength against a basket of major currencies, was at 97.047, down 0.08 percent from its previous close of 97.128.