An increase in instances in China that pushed for stronger controls there caused investor sentiment to decline globally on Monday, hurting the rupee’s chances of an early lifting of curbs as the currency surged broadly.
Performance of Rupee according to Bloomberg
The rupee was last trading at 81.8475 per dollar, according to Bloomberg, after starting the day at 81.8288 from its previous closing of 81.6875 on Friday.
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According to PTI, the rupee dropped 11 paise to provisionally close at 81.85 against the US dollar.
China is coping with flare-ups of COVID. Due to two fatalities on Sunday, Beijing’s most populous district urged that citizens spend Monday at home. Hopes that the government will soon relax its strict regulations have been crushed by the most recent cases.
That benefited the dollar, which is regarded as a haven during global economic turbulence.
What Head of Treasury at Finrex Treasury Advisors say
Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors, remarked, “After opening weak at 81.79, the rupee hit a low of 81.91 before regaining to 81.74. It, however, remained weak and closed at 81.84 as the dollar index moved higher.”
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The dollar index, which measures the strength of the dollar against a basket of major rival currencies, is down more than 6% from its 20-year high reached in October as investors bet that the US Federal Reserve will scale back its aggressive interest rate hikes strategy in response to a drop in inflation there last month.
Although bond yields have risen in 2022 as a result of the Fed’s aggressive interest rate hikes, capital has returned to fixed-income investments denominated in dollars, and as of Monday, the index was up almost 12% for the year.
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