Rupee largely steady on elevated risk appetite in domestic markets

New Delhi: After touching an all-time low and psychologically crucial level of 80 per US dollar last week, the Indian currency rupee traded largely steady on Monday. At the time of writing this report, the rupee traded at 79.82, data showed. An elevated risk appetite in the domestic financial markets and softening of crude oil […]

New Delhi: After touching an all-time low and psychologically crucial level of 80 per US dollar last week, the Indian currency rupee traded largely steady on Monday.
At the time of writing this report, the rupee traded at 79.82, data showed.

An elevated risk appetite in the domestic financial markets and softening of crude oil prices prevented further depreciation in the rupee, said brokerage house ICICI Securities. Indian equity markets have recorded their best weekly performance during the past week, supported by renewed buying, especially in banking and IT stocks as well as the return of foreign investments into the Indian markets after months. This possibly has supported the rupee.

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The Reserve Bank of India Governor Shaktikanta Das on Friday said the central bank will continue to engage with the foreign exchange market and ensure that the rupee finds its level in line with its fundamentals. Speaking at an event, the Governor reiterated the central bank does not have any particular level of the rupee in mind, but it would like to ensure its orderly evolution and have zero tolerance for volatile and bumpy movements.

Widening trade deficit, strength in the US dollar, fund outflows, and buoyed global crude oil prices had been weighing on the currency. The rupee depreciated 6-7 per cent so far in 2022. India’s foreign exchange (forex) reserves continued to slump by $7.541 billion to $572.712 billion for the week ended July 15, the lowest level in 20 months, as the Reserve Bank of India (RBI) likely used its war chest to defend the rupee.

India’s forex reserves in the past few months have declined by over USD 40 billion. Typically, the RBI intervenes in the market through liquidity management, including through the selling of dollars.