Indian rupee marks worst week in 1-1/2 years
- 23 Sep 2022
The Indian rupee steadied by the close of trading on Friday after a turbulent week when it tumbled past 81 per dollar to a record low, with traders pointing to central bank intervention to contain the currency’s rapid fall.
The partially convertible rupee closed at 80.99 per dollar, against a previous close of 80.86. It fell to a low of 81.2250 during the session before the Reserve Bank of India likely intervened, traders at state-run banks told Reuters.
The currency posted its worst week since April last year, shedding 1.6% with most of the losses in the past two trading sessions.
“There was probably heavy selling at 80.97 levels. On last days of the week, it’s usually either RBI trying to stymie the fall or there are genuine inflows in bulk,” said Ashish Ranade, forex and treasury chief manager at Cosmos Bank.
“Overall, it’s a very difficult task for the RBI to control the rupee’s depreciation. We’re now positioning for a 80.75-81.25 trading range, with the higher end acting as tough resistance for the USD/INR pair.”
The dollar index has soared to two-decade highs and risk assets have been battered since the US Federal Reserve late on Wednesday hiked interest rates and took a hawkish stance to fight inflation.
India’s equities sank 1.7% on Friday as the selloff in Asian markets continued. Benchmark bond yields , too, jumped 8 basis points to 7.3926%.
Focus now shifts to the RBI’s meeting next week, with its decision due on Friday. With inflation accelerating and the rupee depreciating, a hike is guaranteed, but markets are split on the consensus.
