Rupee Reverses Gains From Early Trade To End Almost Flat At 82.34 A Dollar

The rupee gained against the dollar as a result of a risk-assets rally following a British fiscal policy U-turn that encouraged investor optimism.

Rupee Reverses Gains From Early Trade To End Almost Flat At 82.34 A Dollar

Rupee rises a touch to 82.29 against the dollar

The rupee reversed gains from early trading on Tuesday against the dollar after a broader risk-assets rally following a significant change in British fiscal policy encouraged investor optimism, with a fag-end sell-off pushing the domestic currency to close nearly flat.

According to Bloomberg, the rupee was last at 82.3362 per dollar after opening at 82.2087, as the dollar took a breather.

PTI reported that the domestic currency fell 6 paise to close provisionally at 82.36 against the US dollar.

"The rupee made a high of 82.02 after opening at 82.20 and was soon at 82.32 as oil companies and importers bought dollars taking advantage of the low levels," said Anil Kumar Bhansali Head of Treasury at Finrex Treasury Advisors.

The rupee rose from 82.35 the previous session, when it traded in a roughly six-paisa range, resembling the steady trading pattern observed over the previous week as the Reserve Bank of India protected the currency from severe depreciation after it repeatedly plunged to all-time lows.

However, analysts caution that the rupee may face a difficult future.

Indeed, beyond the recent trading session, the rupee has collapsed dramatically - reflected in the 52-week range of 73.7787 to 82.6950 per dollar, down nearly 10.8 per cent for the year, suggesting more downside likely in the near term.

"Despite global markets being on a turbulent ride, witnessing the calmness and containment in the rupee for the past couple of sessions amid RBI's intervention, one awaiting a stronger rupee might urge to think; is it a reversal in the rupee and bet otherwise?" Amit Pabari, Managing Director of CR Forex Advisors said.

"The one who presumes that RBI is having our back and eases up shall recall the past episodes when the rupee moved from 80 to 78.50 in 3 sessions and jumped back above 82 to make a new high after a brief consolidation. After a storm comes a calm, and prolonged calmness indicates an upcoming storm," he said.

"We reiterate until the global turmoil eases out and the trend changes across, pressure on the rupee will remain bound though in lag, and the pair are set to move towards 83.00-83.50 levels in a couple of days," added Mr Pabari.

The dollar index, which measures the greenback against six of its major rivals, including the yen, euro, and sterling, dropped to a 1-1/2-week low as European currencies gained strength due to a swift U-turn on the UK's divisive tax-cutting "mini-budget."

The economic strategy of British Prime Minister Liz Truss was largely rejected by Jeremy Hunt, the country's new finance minister.

Britain's government bonds, currency, and stocks increased due to Mr Hunt's decision, bolstering Wall Street and global risk assets.

Despite the overnight decline in the dollar index and the risk-on sentiment, Asian currencies were mostly flat or lower.

.