Rupee Falls To 82.90 Against Rising Dollar On Risk-Off Bets; RBI Eyed

The rupee weakened against a rising dollar on increased flight-to-safety bets driven by the ongoing concerns about how aggressive interest rate hikes by major central banks will affect global economic growth and company profits.

According to Bloomberg, the rupee was last at 82.91 per dollar after opening weaker at 82.82, compared to its previous close of 82.75. 

PTI reported that the domestic currency fell 12 paise to 82.91 against the US dollar in early trade.

"Yesterday the RBI intervened by selling more than a billion dollars and the rupee gained from a low of 83.2325 to 82.70. In the non-deliverable futures (NDF) market, the rupee was at 82.66 before moving to 82.85 this morning. The range for the day is expected to be 82.50 to 83.20 with a close eye on the RBI," said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors. 

"Exporters to keep a hold on their receivables with a stop at 82.50 while importers to continue buying dips to hedge their import payables before a truncated holiday next week due to Diwali festival," he added.

Concerns that major economies may be forced into recessions before inflation is controlled, and that a strong dollar as the Fed tightens policy aggressively will devastate emerging market economies has led to severe volatility in recent weeks in global markets.

The moves in the emerging market currencies are "obviously relevant", but at the "current level and after what happened yesterday", the Reserve Bank of India and the interbank overall positions are more crucial, a trader at a Mumbai-based bank told Reuters.

As the domestic currency hit new lows on Thursday, the central bank actively sold dollars, according to traders. The rupee quickly recovered after the intervention in the afternoon session, climbing from close to its new record low of 83.29 to about 82.75.

Similar to previous sessions, the RBI continued its recent practise of buying and selling swaps alongside spot dollar transactions, which lowered forward premiums. 

"The RBI will dominate moves in both the spot and the forward market," the Mumbai-based trader said.

On Friday, Asian currencies continued to decline as the selloff in US bonds showed no signs of abating. The yield on the 10-year Treasury reached a new 14-year high after data suggested the US labour market was holding up well.

The dollar was steady and the pound wavered after Liz Truss resigned as UK prime minister.

The Japanese yen last traded at 150.20 to the dollar, hovering near a new 32-year low. In Tokyo, the currency first fell beyond the 150 mark late on Thursday.

Even though there hasn't been any indication of additional action since the Ministry of Finance's dollar-selling, yen-buying intervention last month, investors have remained on high alert due to recent threats of intervention from Japanese officials.