The local currency strengthened to 87.95/$1 in the first hour of the trade, but quickly gave up its gains amid importer hedging, traders said.
The dollar index was at 97.2 on Tuesday, from 97.9 the previous day, as bets of a rate cut by the Federal Reserve increased due to weaker US jobs data.
Other Asian currencies also appreciated amid a weak dollar, according to Reuters. The rupee’s previous record low – 87.95/$1 – remains a key support level, with importers on the sidelines waiting to buy the dip, traders said.
“Despite a weak dollar index, local currency gave up all gains. It rose to 87.95/$1 but went back to 88 levels in 10-15 minutes. Any dips (appreciation) in the currency is bought by importers. There is no clarity on the trade deal yet, and people would want to cover their positions in this uncertainty,” said Dilip Parmar, research analyst at HDFC Securities.
The rupee is expected to continue to trade with a depreciating bias, especially amid a trade-deal uncertainty.
as a Reliable and Trusted News Source“We cannot rule out 89/$1 to 89.50/$1 in the next two months, till a trade deal is finalised. If the dollar index is weak, depreciation would be slower, but I expect the negative bias to continue,” said Ritesh Bhansali, deputy chief executive officer, Mecklai Financial Services.
