32 minutes ago
HomeMarket NewsRupee recovers after weak start as dollar demand eases ahead of RBI policy
Market participants say everyone is waiting for the policy announcement. Traders were expecting that the RBI might defend the rupee more strongly if it went near 90.50, as the central bank usually protects round-number levels. But the rupee did not reach that level.
The rupee recovered on December 4 after opening sharply lower at 90.42 against the US dollar. The weak start was driven by the offshore non-deliverable forwards (NDF) market, where the rupee trades outside India and was also seen near 90.40.
Currency dealers said the recovery was led by two factors: limited dollar selling by the Reserve Bank of India (RBI) and lower demand for dollars in the market.
Traders said the usual buying of dollars during the RBI’s daily fixing window did not happen because most banks had already bought their dollars earlier.
The rupee firmed up to around 90.17 in early trade and then to 90.05–90.06 by noon. Dealers said the RBI seemed present but not particularly active in the market.
Many traders also did not want to take big positions before the RBI’s monetary policy announcement on December 5.
Importers seemed to have already covered their dollar needs, and traders who were caught by Wednesday’s sudden jump above 90 had closed their short positions. With no fresh surprises today, the demand for dollars stayed low, helping the rupee strengthen.
Market participants say everyone is waiting for the policy announcement. Traders were expecting that the RBI might defend the rupee more strongly if it once it inched closer to 90.50 levels.
The rupee was trading at 89.98 against the US dollar at 1:47 PM on December 4.
Also Read | Indian IT stocks TCS, Wipro, Mphasis and peers extend gains after rupee makes new low of 90.42
