The local monetary unit ended slightly higher at 86.72, likely on central bank interventions, traders said, as stocks whipsawed through a volatile trading day, marked by the unpredictability of the expiry of weekly contracts on the biggest bourse.
“All of emerging market country currencies are on a weakening bias due to the war and as long as oil prices are elevated, the rupee is expected to be under pressure,” said Ritesh Bhansali, deputy CEO, Mecklai financial services.
Brent crude oil prices remained elevated at $77 per barrel Thursday, amid few signs of a truce in the Middle East.
The rupee levels seen Thursday have been the lowest since mid March, LSEG data showed. The rupee had closed at 86.48 per dollar on Wednesday.
A rise in crude oil prices is detrimental for inflation in India as the country is a large importer of the commodity. Traders said the Reserve Bank of India‘s (RBI) forex street presence has been rather light-footed despite the volatile week, and that the central bank has been selling dollars from its stockpile in a calibrated manner to stem the losses for the rupee and prevent imported inflation.”Today (Thursday), RBI was present via state-run banks and offered dollars above the 86.80 levels,” a trader from a public sector bank said. Traders expect the weakening bias to continue amid tensions in West Asia.
“Since the rupee is weakening every day, exporters are cautiously hedging some amount everyday, and not all at once,” Bhansali said.
