The Indian rupee settled little changed on Thursday as likely aggressive dollars sales from the central bank countered the impact of the global risk aversion triggered by the escalating conflict in the Middle East.
The rupee ended at 83.2450 to the U.S. dollar against 83.2575 in the previous session.
The Indian currency came close to testing its record low of 83.29, hit in October 2022, towards the end of the spot trading session.
The Reserve Bank of India (RBI), which was likely present in the market throughout Thursday, sold dollars aggressively when the rupee reached 83.27-83.28 levels, a foreign exchange trader at a private bank said.
The central bank has also been regularly intervening in the non-deliverable forward market to manage the rupee’s opening in the spot session, traders said.
The U.S. 10-year Treasury yield jumped, nearing a 5% level not seen since just before the financial crisis in 2007.
The dollar index was largely steady at 106.54 while Asian currencies weakened. Brent crude oil futures dipped below the $90-per-barrel mark after OPEC showed no signs of supporting Iran’s call for an oil embargo on Israel.
“On every level there are big bids (on USD/INR),” said Apurva Swarup, vice president at Shinhan Bank India.
Importers have been actively buying dollars while the RBI continues to supply them, Swarup said.
Investors will be paying close attention to remarks by U.S. Federal Reserve Chair Jerome Powell, who is scheduled to speak later on Thursday.
The U.S. will also report initial jobless claims on Thursday. The data could offer cues on whether the rate hiking cycle has sufficiently cooled the labour market in the world’s largest economy.
While the rupee has avoided falling to a fresh record low, short positions on the currency have firmed to their highest since November 2022, according to a Reuters poll.
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