The rupee suffered from a rogue dollar as well as rising crude costs because India imports more than three-fourths of its oil requirements.
Digital Desk: The
dollar retreated from new two-decade highs on Tuesday as the rupee gained lost
territory due to expectations of intervention by the Reserve Bank of India and
a reduction of the interest rate differential gap.
According
to Bloomberg, the rupee was last trading at 79.8862 against the dollar, down
from its previous close of 79.9675. This represents a significant improvement
from Monday's record lifetime low of 80.1288.
The
rupee increased four paise to 79.87 against the US dollar in early trade,
according to PTI.
In the previous session, the Indian rupee reportedly hit
an all-time low against the dollar of 80.15, although it closed the day below
that mark as a result of Reserve Bank of India intervention to protect the
rupee.
According to Santosh Meena, Head of Research at Swastika
Investmart, "the fight to manage inflation is projected to continue in the
far future and the rate hikes are expected to exert pressure on the rupee and
other emerging market currencies."
At the start of the Asian session, the dollar index had
fallen from its overnight high of 109.48, which had not been attained since
September 2002, to 108.65. The dollar index compares the value of the dollar to
a basket of six foreign currencies, with the euro holding the greatest weight.
The rupee suffered from a rogue dollar as well as rising
crude costs because India imports more than three-fourths of its oil
requirements. Additionally, the rupee suffered from a rise in foreign markets
brought on by importers' demand for dollars, which impacted severely on the
currency.
Oil held the highest increase in more than a month on
Monday as traders assessed supply concerns, including the potential of an OPEC+
output cut.
The expectation of supply reductions ahead of a
producers' conference on September 5 has helped crude prices hold gains even
though they declined on Tuesday after recording their greatest gains in more
than a month the previous session.
Now hovering around $104.50 per barrel, Brent
has significantly recovered from its most recent low of about $91.50.
According to a dealer at a Mumbai-based bank,
the rupee is affected by the fact that oil prices are "back on an upward
track."
The trader continued, "However, if the
rupee managed to maintain above 80 yesterday despite all of the bearish signs,
then there is no need to chase the pair (USD/INR) higher."
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