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Rupee up on RBI intervention; DBS expects decline to 84/USD by year-end

A customer hands Indian currency notes to an attendant at a fuel station in Mumbai

By Jaspreet Kalra

MUMBAI (Reuters) - The Indian rupee was slightly up on Wednesday after the central bank once again likely intervened, both in the non-deliverable forward (NDF) and the over-the-counter (OTC) markets.

The rupee was at 83.24 to the U.S. dollar by 10:30 a.m. IST compared with the close of 83.2675 in the previous session. The Reserve Bank of India (RBI) likely sold dollars via public sector banks to defend the rupee from slipping below the record low of 83.29.

The RBI was active in the OTC and the NDF markets before 9.00 a.m. IST, the normal opening time of onshore currency markets, traders said.

Despite the RBI, yet again, indicating that it was not willing to tolerate the rupee weakening from here, analysts revised their target for USD/INR higher.

"We lifted our end-2023 forecast for USD/INR to 84 from 81.8," DBS bank analysts stated in a note, adding that the rupee is likely to settle into the 83-85 range, weaker than the 81-83 that has prevailed most of the year.

Depreciation of the Chinese yuan, a narrow U.S. and India rate differential, and rising crude prices are all likely to exert pressure on the rupee, the note stated.

While the rupee averted a record low today, it is "not out of the woods yet," said Dilip Parmar, a foreign exchange research analyst at HDFC Securities, noting that the downside risks continue to linger.

Brent crude futures fell by nearly 1% to $93.48 after hitting a fresh year-to-date high of $95.96 on Tuesday. Asian currencies were mostly weaker ahead of the U.S. Federal Reserve policy decision.

The Federal Reserve is widely expected to hold rates steady and investors will be keeping a keen eye on the central bank's interest rate and growth projections.

(Reporting by Jaspreet Kalra; Editing by Janane Venkatraman)