Dollar vs Rupee: The rupee began the week on a strong note, extending its gains from the previous week versus a battered dollar and continuing the momentum initiated by softer-than-expected US inflation figures the previous week.
According to Bloomberg, the local currency last traded at 80.52 per dollar after opening at 80.54, down from Friday’s finish of 80.81.
Head of the Treasury department at Finrex Treasury Advisors, Anil Kumar Bhansali said in the previous four years, the rupee had its best week.
“The rupee enjoyed its best week in the previous four years, suggesting that it is on a roll as inflows rise. 80.20 to 81.00 is the predicted range for the day “the head of the Treasury department at Finrex Treasury Advisors, Anil Kumar Bhansali.
“The rupee has risen as a result of significant gains in Asian currencies. However, until we observe a decline in the dollar index near 100, increased oil prices and a large trade imbalance should limit the gains to levels around 80 “, he added.
Asian currencies had a strong start to the week, continuing the trend set by last week’s softer-than-expected US inflation figures.
Dollar vs Rupee: Rupee increased 25 paise to 80.53 against the US dollar in early trade
The rupee is clearly gaining momentum, but chasing the USD/INR pair lower from these levels “makes little sense” in terms of risk-reward, a trader at a Mumbai-based bank told Reuters.
The rupee has already recovered more than 3% from record lows, and the dealer said that “then you have to consider oil prices.”
During the course of two sessions in the previous week, the dollar index fell 3.6%.
However, the US dollar maintained steady on Monday after suffering a significant decline the previous week as Federal Reserve Governor Christopher Waller announced that the central bank was continuing its fight against inflation on Sunday.
Due to slightly lower-than-expected inflation data released on Thursday, the dollar index dropped 3.6% over two sessions last week, marking its worst two-day percentage drop since March 2009.
Investors flocked to risky assets in anticipation that the Fed would scale back its rate increases as inflation peaked, driving up global equities.
The two-year Treasury yield dropped by 30 basis points on Friday, the most in a single day since 2008.
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Carol Kong, a currency strategist at Commonwealth Bank of Australia, told Reuters, “I think the market got a little ahead of itself.” She added that Fed officials will likely give the market a reality check, helping the dollar regain some of its most recent losses.
Mr. Kong predicts that US inflation will likely remain high and that the Fed will continue to tighten monetary policy.
Early Asian trading saw a decline in the dollar index, which gauges the performance of the dollar against a basket of major currencies, which dropped to 106.610, not far from its low of 106.27 set on Friday.
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