MUMBAI: The Indian rupee is tipped to open flat to the dollar on Wednesday on more losses on Asian currencies and a further pullback in oil prices.
The rupee is likely to open at 82.30-80.32, compared with the previous closing of 82.3125.
The local unit on Tuesday traded in a narrow range, bucking the broad decline in Asian peers, thanks to likely dollar sales by the Reserve Bank of India.
The central bank was persistently offering dollars at 82.38-82.40 through state-run banks, according to traders.
The “help from the RBI” and from the lower oil prices will mean that rupee “faces lesser risk” of posting a record low, a Mumbai based trader said.
The rupee reached a record low of 82.6825 on Monday.
The RBI has been selling dollars in spot on Monday and Tuesday and at the same time conducting buy/sell swaps, according to traders. This has prompted a decline in rupee forward premiums with the 1-year USD/INR implied slipping to 2.85%.
Indian rupee likely to open lower as risk aversion boosts dollar; RBI key
On Monday, this yield had reached 3.07% at one point. While the simultaneous dollar sales in spot and receiving in forwards will “in a way help forex reserves”, the fall in premiums makes its cheaper for importers to hedge, the trader said.
The dollar was higher against its major peers and Asian currencies on Wednesday, supported by Treasury yields.
The dollar index climbed to 113.58, while Asian currencies were down at least 0.2% each.
The US Federal Reserve rate outlook supported demand for the dollar.
In line with the broadly hawkish comments from policymakers, Cleveland Fed President Loretta Mester said the US central bank had yet to get surging inflation under control and will need to press forward with rate hikes.
Oil prices extended losses on recession fears.
The International Monetary Fund on Tuesday cut its world growth forecast for next year and warned of increasing risk of a global recession.
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