MUMBAI: The Indian rupee declined against the US dollar on Thursday, tracking other major Asian currencies, amid concerns over a European lender that dented the already fragile risk sentiment. The rupee was at 82.6800 to the dollar by 10:52 a.m. IST, compared with 82.5950 in the previous session. The local currency had declined to 82.80, the lowest in two weeks.
Among major Asian currencies, the offshore Chinese yuan fell to 6.90 to the dollar and the Korean won dropped 0.5%. Over the last 6 months, USD/INR has been ranged with 83.00 acting a upper cap, Anindya Banerjee, head research - FX and interest rates at Kotak Securities said. “Positional traders, looking to short USD/INR can maintain a stop above 83.05.”
Asian shares and currencies resumed losses on fears of a banking crisis in US and Europe. Just when it seemed that risk aversion over the collapse of U.S lender Silicon Valley Bank had abated somewhat, investors had to deal with developments at Credit Suisse.
Likely custodial outflows drag Indian rupee to near 82.50
The shares of the Swiss lender plunged on Wednesday after its largest shareholder said it could not provide further support to the lender.
The Swiss central bank had to come to the rescue to prevent a wider contagion.
European equities plunged on Wednesday, while near-maturity bond yields jumped on bets that worries over financial stability may prompt the European Central Bank to back off from raising interest rates.
ECB policymakers meet on Thursday amidst the turmoil in financial markets that could force it to divert from plans for a 50 basis points rate hike.
Concern about Credit Suisse is adding to the SVB drama, with financial stress indicators spiking higher, ING Bank said in a note. All this “adds unwanted excitement ahead of next week’s Fed and today’s ECB meetings”.
Comments
Comments are closed for this article.