Rupee Flat At 82.75 A Dollar As RBI Steps In To Limit Any Sharp Losses

The rupee ended flat on Friday against the king dollar, even as Treasury yields rose as the Reserve Bank of India stepped in and limited any sharp losses after the currency crashed to a new all-time low in the previous session.

Bloomberg showed the rupee was last changing hands at 82.7437 per dollar after opening slightly weaker at 82.82, compared to its previous close of 82.7538. 

According to PTI, the rupee gained 4 paise to close provisionally at 82.75 against the US dollar.

"The rupee was in a range of 82.60 to 82.90 per dollar after it opened weaker on higher US yields. But the RBI was active the entire day ensuring it does not suffer any further weakness. The US 10 year yields have been over 4.25 per cent - a 14-year high - keeping the dollar well bid against most Asian currencies, which have been weaker to the greenback," said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors.

"Equities saw a bit of profit booking, while (US) Dow futures were down 150 points. It has generally been a risk off sentiment today with most equity markets down," he added.

Reuters reported that Indian exporters were holding back on dollar sales in anticipation of a further decline in the rupee after it hit a record low of 83.2925 against the greenback on Thursday.

On Wednesday, the rupee dramatically crossed the 83-to-a-dollar threshold for the first time ever as the RBI stopped supporting it at around the 82.40 levels.

"We are advising exporters to hedge only partially, about 15-20 per cent of their exposure," down from anything between 40-60 per cent during normal times, a Treasury Sales Executive at a large private bank told Reuters.

The US Federal Reserve's aggressive rate hike path, growing current and trade account deficits domestically, and foreign investors continuing to sell risky assets on a global recession concerns are a few of the problems the rupee is facing.

The RBI has been intervening in both the spot and future markets to shield the rupee from steep declines.

The dollar sales have become even less appealing as a result of the RBI's buy/sell swaps in the future market, which have caused forward premiums to drop to their lowest level in more than a decade.

In line with its Asian peers, the rupee has lost about 12 per cent of its value against the dollar.