The rupee eased a touch after a sharp rally in the previous session, even as the dollar moved broadly lower on Tuesday as risk appetite improved after China took another significant step toward reducing Covid restrictions.
Bloomberg showed the rupee was last trading at 82.71 per dollar in early trade, compared to its previous close of 82.6512 on Monday.
“The Indian rupee still seems resilient and is set to open at 82.73 per dollar after yesterday’s rally to 82.65. The range for the rupee looks to be between 82.40 to 82.90,” said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors.
“Exporters to continue selling near 82.85-90 levels, while importers may buy dips to hedge their near-term payables and wait for better levels for January payables,” he added.
Asian currencies were supported by risk-taking as China would not require incoming travellers to enter quarantine upon arrival starting January 8, according to the National Health Commission.
“There seems to be no let-up in the pace of relaxing COVID restrictions despite the surge in COVID cases in the mainland,” Christopher Wong, a Currency Strategist at OCBC, told Reuters. “This perhaps demonstrates Chinese policymakers’ resolve to full reopening. In addition, there was news of China potentially taking extraordinary measures to support growth.”
The US dollar index eased.
“In line with its seasonal trend, December has been a soft month for the greenback,” ING FX Strategist Francesco Pesole told Reuters. “It’s worth remembering that the dollar rose in each of the past four years in January. Our view for early 2023 is still one of dollar recovery.”
Meanwhile in the energy market, Tuesday saw a little increase in oil prices due to worries that the production and logistics of shale oil and petroleum products are being hampered by winter storms sweeping the US.
Higher oil prices weighs on the domestic currency as the country depends on imports for over 85 per cent of its needs.
“Surging oil prices amid winter storms across the US which is affecting logistics and production of petroleum products and shale oil could remain a concern for the just eased deficits and a stronger rupee,” said Amit Pabari, Managing Director of CR Forex Advisors.
“While a daily struggle for the break below 82.60 is evident for USDINR, once taken out, we could see the rupee rising near 82.20-82.00 levels as played by December seasonality,” he added.
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