India Rupee Marks Worst Week In Over 3 Months On Fed.

India Rupee Marks Worst Week In Over 3 Months On Fed.

23 Feb 2018 05:41 PM
 
Myforexeye Research Report
The Indian rupee posted its biggest weekly decline in more than three months, as the Federal Reserve’s latest meeting minutes strengthened bets of a faster pace of rate increases in the U.S. this year, boosting demand for the greenback.
Hawkish minutes of the latest Monetary Policy Committee meeting, where members warned of inflation gaining pace in the months ahead, also weighed on the rupee.
However, the rupee settled higher at 64.73 to a dollar in Mumbai today, against 65.04 at the previous close, amid a rebound in local and regional shares. The currency rose 0.48%, marking its biggest single-session rise since Nov. 23. Most other Asian currencies ended flat to higher against the dollar.
On a weekly basis, the rupee fell 0.81% against the dollar, its steepest decline since the week ended on Nov. 10. However, today’s recovery and state-run banks’ dollar sales earlier this week, apparently on behalf of the central bank, helped avert further losses.
“The rupee, already under pressure due to a rising dollar demand amid banks’ reluctance to roll over buyer’s credit after the recent PNB scam, was further weighed down by strength in the greenback,” said Ankur Jhaveri, co-head, forex and equities, Edelweiss Financial Services. “In the short term, if the Reserve Bank of India comes out with a clarification on the buyer’s credit, we expect the rupee to recover toward 64.35 levels.”
Jhaveri expects the rupee to trade in a 64.35-65.40 to a dollar band in near term and believes that the currency is set to depreciate to 66 levels in the long run amid bets of three or four rates hikes by the Federal Reserve this year, against three increases in 2017.
The nation's benchmark BSE Sensex ended up 0.95%. Foreign investors net sold $347.94 million of Indian shares in the previous session, data from National Securities Depository Ltd. Showed.
Domestic sentiment has taken a beating in recent sessions, amid revelations of fraudulent transactions worth about $1.77 billion at state-run Punjab National Bank.
The PNB fraud has led to volatility not only in spot rupee but also dollar/rupee forward market, with far forward premiums coming off. 

Date : Feb-2018

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