1 week ago
Rupee Opens Higher as Weaker Dollar Meets Oil Risks
The rupee started the day stronger against the US dollar.
It opened at 95.56, which was 19 paise better than before.
The dollar became weaker after the US Treasury announced plans to buy more long-term government bonds.
This announcement also helped push US bond yields lower.
However, expensive crude oil could make it harder for the rupee to keep rising.
Traders also said the outlook for Asian currencies remains weak.
The Treasury’s plan is not the same as the Federal Reserve creating new money through quantitative easing.
One analyst said the rupee has support around 95.30 to 95.50.
If that support remains, the dollar could move toward 96.20 to 96.50 against the rupee.
The rupee opened 19 paise higher at 95.56 against the US dollar on Thursday, 20 August.
The dollar weakened after the US Treasury announced larger purchases of longer-term government bonds.
The Treasury plans to raise purchases to $4 billion per operation from 9 September.
Traders expect the rupee’s recovery to remain limited because crude oil prices exceed $90 and sentiment is weak.
Analyst Amit Pabari sees support near 95.30–95.50 and a possible move toward 96.20–96.50 if that support holds.
- Who
- The Indian rupee, the US dollar, the US Treasury, traders, and currency analyst Amit Pabari.
- What
- The rupee opened 19 paise higher at 95.56 against the US dollar, while markets assessed the US Treasury’s bond-buying announcement.
- Where
- In the foreign-exchange market, with the rupee trading against the US dollar.
- When
- Thursday, 20 August; the Treasury’s larger purchases are planned from 9 September.
- Why
- The rupee was supported by a weaker dollar, but elevated crude oil prices and fragile market sentiment limited its recovery.
Factors Supporting the Rupee
Factors Limiting the Recovery
Currency direction
Factors Supporting the Rupee
A weaker US dollar and lower US Treasury yields provided initial support to the rupee.
Factors Limiting the Recovery
Traders expect the recovery to remain limited because crude oil prices are above $90 and the near-term outlook for Asian currencies is weak.
Near-term outlook
Factors Supporting the Rupee
Amit Pabari said that holding support near 95.30–95.50 could allow the rupee to move gradually toward 96.20–96.50 against the dollar.
Factors Limiting the Recovery
The article says oil prices and market sentiment remain fragile, making any gains likely to be shallow and short-lived rather than a trend reversal.
Key facts
- Opening exchange rate
- 95.56 rupees per US dollar
- Opening move
- 19 paise higher
- Dollar Index move
- Down 0.88% on Wednesday, its sharpest single-day fall since mid-March
- Treasury purchase plan
- At least $4 billion of longer-term government bonds per operation from 9 September
- 30-year Treasury yield
- Fell to 5.18%, about 16 basis points below its recent high
- 10-year Treasury yield
- Declined to 4.64%
- Analyst support range
- 95.30–95.50 for the rupee
Sources
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