Rupee trades flat against US dollar amid likely RBI intervention
The Indian rupee traded flat against the US dollar on Friday as the Reserve Bank of India (RBI) likely stepped in to prevent the local unit from sliding towards its lifetime low. The rupee was trading around 83.23, barely changed from its close at 83.2425 in the previous session.
The dollar index was little changed at 106.4 after an overnight rally led by the upside surprise on US inflation.
Asian currencies weakened after data showed that US inflation rose more than expected in September.
The headline US consumer price index (CPI) rose 0.4% month-on-month in September, slightly more than expected. The closely watched core CPI rose 0.3%.
The inflation data signalled that the US Federal Reserve is unlikely to declare victory on inflation in a hurry and will continue to hold rates higher for longer, analysts said.
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On the domestic front, India’s headline retail inflation rate, or the Consumer Price Index (CPI), cooled down to a three-month low of 5.02% in September led by drop in vegetable prices, according to data released by the Ministry of Statistics and Programme Implementation on Thursday. Inflation print for August was 6.83%.
The Reserve Bank of India (RBI) likely sold US dollars near 83.25 levels via state-run banks, five traders said.
The RBI is clearly defending a certain level for the rupee, said Dilip Parmar, a foreign exchange research analyst at HDFC Securities.
The local unit could face additional pressure from foreign investors continuing to sell Indian equities, Parmar added.
Overseas investors have sold Indian equities worth $966 million in October so far, adding to the $1.77 billion worth of sales last month, according to NSDL data.
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(With inputs from Reuters)
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Updated: 13 Oct 2023, 12:41 PM IST
