“Apart from corporate dollar demand, there was hardly any activity from traders or speculators, which was clear as volumes remained shallow,” a trader with a private bank said.
Earlier in the day, bankers were willing to pay a roughly 1.5-paisa premium to buy dollars at the RBI fixing rate, signalling steady dollar demand.
The rupee hovered around 90 through the session and is seen at risk of slipping past the mark this week, with thinning year-end volumes likely to magnify flow-driven moves, traders said.
“On the surface, markets looked calm – but beneath that calm, a larger shift may be quietly taking shape as the year turns,” said Amit Pabari, managing director at FX advisory firm CR Forex. Asian cues were largely unsupportive for the rupee, with regional currencies mostly weaker and the dollar index rising to 98.05.
Meanwhile, dollar/rupee forward premiums were relatively quiet after a highly volatile week, with the one-year implied yield inching up 2-3 basis points to around 2.80%. The rupee’s slide against the dollar has increased its allure for UBS Asset Management ahead of a long-anticipated trade deal with the U.S.
“We like the currency and feel it is very cheap. The trade deal has not yet been announced but we are hopeful it would be announced soon, so at these levels, the currency is looking attractive,” said Shamaila Khan, head of fixed income emerging markets and Asia Pacific, UBS Asset Management.
