By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee declined against the U.S. currency on Monday, after climbing to a near two-month high at open on dollar purchases by public sector banks likely for the Reserve Bank of India (RBI), traders said.
The rupee last traded at 81.39 to the dollar, down from 81.12 in the previous session. The local currency had reached 80.86 on the interbank order matching system immediately after the open, its highest level since Dec. 1.
“It was the RBI that stepped in to buy dollars and then it was the oil companies,”said Anil Bhansali, head treasury at Finrex Treasury Advisors.
Like it did back in November, the RBI has managed to arrest the upward momentum on the rupee, said a trader at a private bank, who did not wish to be identified. It should be now clear that, at least for the moment, the RBI is not comfortable with the rupee above 81.
The RBI’s dollar purchases and the dollar index’s tumble have helped the Indian reserves rise to $572 billion, their highest level since early August. That compares to the near $525 billion-level print around mid-October.
The rupee at open was helped by the dollar index’s fall to below 102. The positive risk sentiment alongside expectations of milder U.S. Federal Reserve rate hikes dampened the demand for the greenback.
A string of weak U.S. data releases and softer-than-expected inflation readings have increased confidence that the Fed is close to pausing its rate hike cycle.
U.S. manufacturing and service flash PMI (Purchasing Managers’ Index) and December-quarter GDP estimates will provide investors with more insights into how the world’s largest economy is faring.
(Reporting by Nimesh Vora; Editing by Janane Venkatraman)
