The rupee wobbled again at the start of what promises to be a volatile week for markets, sinking to a record intra-day low of 82.72 against the US dollar but regaining some respectability at the close after a bout of intervention by the RBI.
Markets have whipsawed in response to the escalation of hostilities between Russia and Ukraine, the lingering fears about an another rate hike by the US Fed to cool inflation, surging crude oil prices after the recent Opec+ announcement of a 2 million barrels per day cut in production from November 1, and the growing worries about the global macroeconomic situation.
While the currency opened on a weak note at 82.68 to a dollar and fell further to 82.72, dealers said the floundering rupee recovered after the RBI intervened. The currency then closed unchanged at 82.33.
The pressure on the rupee came as data released last week showed the US economy remained in fine fettle, providing the Fed with the headroom to raise rates again without fretting about growth in the US.
The RBI is widely expected to raise the key rate by another 75 basis points early next month. The market will now focus on the US CPI numbers to be released on Thursday.
Last week, the unemployment rate in the US came in at 3.5 per cent — a lot better than the market’s expectation of 3.7 per cent. Its non-farm payrolls also stood at 263,000 against a forecast of nearly 250,000. Analysts said the strong job numbers showed that the US economy could easily withstand further tightening from the Fed. Recently, various Fed officials have reiterated that it remains committed to its resolve to smother inflation and that one can expect interest rate increases till 2023.
With investors preferring safe haven assets, the US dollar remained firm in the overseas markets with the Dollar Index trading at over 113 levels against the previous close of 112.80. The global oil benchmark Brent crude was also firm at 97.83 per barrel.
“The rupee hit fresh record lows on rising oil prices. If it jumps above $100 per barrel, it will surely ring alarms and further stress the deficits and the rupee. Weakness was also seen as Fed members continued to sound hawkish. The RBI has so far intervened only sporadically to taper volatility – and may continue to do so. We expect the USD-INR pair to trade higher in a range of 81.80 to 83.50 for this week,” said Rahul Kalantri, VP commodities at Mehta Equities.
Dilip Parmar, research analyst at HDFC Securities, added that the directional trend remained bearish for the rupee amid tighter liquidity conditions and risk-averse sentiments. He added that the spot US dollar rupee is witnessing near-term resistance at 82.90 and support at 81.95.
Meanwhile, benchmark indices posted losses for the second straight session on Monday. After crashing over 800 points in intra-day trade to 57365.68, the Sensex clawed back some lost ground to end 200.18 points, or 0.34 per cent, lower at 57991.11. The NSE Nifty fell 73.65 points, or 0.43 per cent, to end at 17241.
