The rupee rose against the dollar, extending gains from the previous session as investors analyzed whether the pricing of monetary tightening to combat inflation in the United States and Europe is approaching.
Currency weakness is causing problems for countries around the world due to the strength of the US currency amid the tightening of US monetary policy.
While the Bloomberg Spot Dollar Index fell on Friday, it remained in sight of a record high, indicating that the volatility of the forex markets is not slowing down anytime soon.
However, PTI reported that the rupee rose 8 pounds to 79.61 against the US dollar in early trading, while Bloomberg quoted the Indian currency at 79.6387, compared to its previous close of 79.7175.
It shows the rupee is holding its ground against the rampant dollar as suggested by the Reserve Bank of India governor earlier this week and the central bank’s willingness and tolerance to support extreme currency volatility, even at the cost of declining foreign exchange reserves.
On the other hand, what has helped the dollar’s appeal this year is the Fed’s aggressive rate hike policy stance, which President Jerome Powell confirmed on Thursday.
Oil prices fell in early trading on Friday after a slight recovery in the previous session, which made it heading for a decline for the second week in a row and fell by 4 percent over the course of the week, falling below $ 90 a barrel.
This is likely to boost the rupee, as India imports more than 80 percent of its oil and a stronger currency defends the country’s foreign trade balances.
Meanwhile, the European Central Bank raised key interest rates by 75 basis points, pushing the euro above par with the dollar.
“The European Central Bank raised interest rates by 75 basis points, sending the euro up and the dollar index down to 109.08. Brent oil remained below $90 a barrel. Asian currencies rose against the dollar,” he told PTI.
He added that the rupee will remain in the range of 79.40 to 79.80 for the day.