Rupee Recovers From Deep Losses, Tracking Improved Market Sentiment

The rupee recovered against the dollar on Tuesday to bounce back from steep losses in the previous session.

Rupee Recovers From Deep Losses, Tracking Improved Market Sentiment

The rupee bounces back to 81.55 against the dollar

The rupee recovered against the dollar on Tuesday to bounce back from steep losses in the previous session as Britain's policy U-turn helped improve global market sentiment broadly and pushed the pound to gain significantly from last week's historic lows, which held the greenback down.

According to Bloomberg, the domestic currency gained to 81.55 per dollar after opening at 81.65, compared to its previous close of 81.88, which was not far from its record low of 81.95 against the greenback. 

PTI reported that the domestic currency rose gained 31 paise to 81.51 against the US dollar in early trade.

However, rising crude price in the international market restricted the rupee, forex traders told PTI.

As US economic data revealed a slowdown in manufacturing, the dollar lost of its appeal due to a decline in Treasury yields, which suggested that the impact of the Federal Reserve's rapid rate hikes have already been felt.

The recovery of sterling has calmed some market jitters, but the dollar's continued gain keeps many major currencies close to historic lows and has governments in Asia on edge.

Japan's currency, for instance, reached 145 to the dollar on Monday - a level that prompted government intervention last week. It was last trading at 144.71.

At $0.9823, the euro was just about three cents higher than its 20-year low from the previous week.

Chinese officials have implemented a range of strategies to strengthen the yuan, from unusually strong market signals to administrative actions that increase the cost of selling the currency.

The Australian dollar wobbled ahead of the Reserve Bank of Australia's policy decision, and the New Zealand dollar was held at $0.5715 as the Reserve Bank of New Zealand met on Wednesday.

"More volatility is almost certainly assured as FX markets re-focus on U.S. recession risks, which continue to build," Miles Workman, senior economist at ANZ, told Reuters, referring to the US jobs data on Friday as the next major data point on the horizon.

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