Rupee gains ground as dollar weakens

The Indian rupee rose on Monday, reaching its highest level in nearly two weeks, as the dollar index dropped to a six-month low. The Indian currency was trading at 83.90 against the dollar at 11:10 am IST, up 0.05 per cent from its previous close.

The dollar index fell 0.3 per cent to 102.1, its lowest point since mid-January, as investors anticipate a less hawkish stance from the Federal Reserve.

Market participants are keenly awaiting the release of the Fed’s July policy meeting minutes on Wednesday and Chair Jerome Powell’s speech later in the week.

While the rupee rose in early trading, touching 83.85, its highest level since August 6, it underperformed other Asian currencies which gained between 0.3 per cent and 1.5 per cent. The rupee has lost about 0.2 per cent against the dollar in the past month.

Heightened dollar demand from domestic importers and persistent foreign portfolio outflows have limited the rupee’s gains. Overseas investors have withdrawn $2.5 billion from Indian stocks in August so far.

Currency traders believe the rupee is unlikely to surpass the 83.80 level unless there is a significant reversal in equity outflows and a decline in importer dollar demand.

Attribution: Reuters

Subediting: M. S. Salama