The greenback, which has been gaining against major currencies since the Fed hiked rates on Wednesday, rose further with the dollar index hitting a 20-year high. In the UK, the largest tax cuts since 1972 have sent sterling and government bonds into free fall. The pound plunged more than 3% against the dollar to levels last seen 37 years ago.
The rupee ended the week down 1.6%, which is the worst weekly drop since April 9, 2021. The dollar traded above 81 in the early hours. However, the second half saw some major sales, which retailers say may have been on behalf of the central bank. The rupee finally closed at 80.99 – 12 pairs weaker than Thursday’s close of 80.87.
“The rupee hit a high of 81.23 in early trading, followed by the intervention of the RBI, which took it to 80.76. But the spot climbed to close at 80.99 due to the negative undercurrent of the rupee, “said KN Dey of United Financial Consultants.
Dealers said the combined intervention of the RBI in the spot and forward markets would far exceed $ 100 billion. Although the number was high, retailers said it was reasonable considering the volatility. With the conflict in Ukraine likely to take a turn for the worse, no one is willing to say the worst is over for the currency.
Dey said the RBI’s intervention could be to control any speculation in the market. “The pressure on the rupee would continue for a while. With India’s fundamentals good, we may not see a sharp depreciation. The rupee could move in the 80-82.50 range over the next 3 months, ie until the end of December, “He said. Within a week of the RBI’s monetary policy committee decision, uncertainty in the forex markets is expected to persist.
“Most currencies are under pressure as the dollar continues to strengthen. The yen’s volatility remained high after the Bank of Japan stepped in to curb a sharp depreciation. The Bank of England issued its policy statement and has increased rates by 50 basis points (100 basis points = 1 We expect the dollar-rupee to trade sideways and price in the 80.40-81.20 range, “said Gaurang Somaiya, forex and bullion analyst at Motilal Oswal Financial Services.