Indian rupee wedged in a tight band; RBI intervention in focus (updated)

Ioneer

21/07/2022 07:14

(Updates with details, adds bond)
    By Swati Bhat
    MUMBAI, July 21 (Reuters) - The Indian rupee was held in a
tight range on Thursday as dollar selling intervention by the
central bank offset early losses in the currency on the back of
weakness in its Asian peers, traders said. 
    The partially convertible rupee  INR=IN  was trading litle
changed on the day at 79.97/98 per dollar by 0550 GMT, compared
with its close of 79.99 on Wednesday. 
    Earlier in the day, it fell to 80.05, just shy of its record
low of 80.0650 touched on Tuesday.
    Traders said there was some dollar selling spotted above 80
levels by state-run banks, likely on behalf of the central bank,
but gains in the domestic share market and losses in the dollar
against the euro helped limit a sharper fall.
    "We sense that the worst is priced in the currency, with the
value likely to be peaking around 80.5-81.0 against the
greenback," Hitesh Jain, senior vice president, institutional
research at Yes Securities said in a note.
    "We say this because there is a growing indication that
inflation across the globe has peaked given the wide retreat in
food prices, oil and other industrial commodities," he added.
    Analysts said foreign portfolio outflows from the domestic
share market have also slowed in July but it is still too early
to say the trend has reversed.
    Foreign investors have dumped nearly $30 billion worth of
Indian shares so far in 2022, adding to the downward pressure on
the rupee.
    However, investors will remain wary of the central bank
after a source said the RBI was prepared to sell another $100
billion to defend the rupee.  urn:newsml:reuters.com:*:nL4N2Z10YB
    The RBI will announce its next policy decision in early
August. The market broadly expects to see another 50 basis point
rate increase after retail inflation stayed above 7% in June,
the sixth straight month it has been above the RBI's upper
tolerance level of 6%. 
    The benchmark 10-year bond yield  IN065432G=CC  was trading
1 basis point higher on the day at 7.46%.

 (Reporting by Swati Bhat
Editing by Shri Navaratnam and Kim Coghill)
 ((swati.bhat@thomsonreuters.com; twitter.com/swatibhat22;
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swati.bhat.thomsonreuters.com@reuters.net))