The rupee was subdued early on Monday even as the dollar hovered roughly 1 per cent below a two-decade top versus major rivals, as investors eye a slew of central bank meetings this week, with the Federal Reserve headlining widespread interest.
Bloomberg showed the rupee last at 79.7200 per dollar, after opening at 79.6700, compared to Friday’s close of 79.7450.
PTI reported that the domestic currency gained 8 paise to 79.70 against the US dollar in early trade.
Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors, stated that the rupee opened marginally firmer due to Asian stocks opening flat or higher, the dollar index at 109.80, US Treasury yields at 3.45 percent, and Asian currencies opening marginally stronger than they did on Friday.
“The range for the day is expected to be 79.50 to 80 with a close watch on RBI as they try to maintain the 80 level,” Mr Bhansali told PTI.
The dollar index, which compares the value of the greenback to six other major currencies, rose 0.09 per cent from Friday to 109.66. It has been volatile in recent weeks, reaching a high of 110.79 on September 7 for the first time since mid-2002 before falling to 107.67 six days later.
Investors have been swayed by economic data that has, on occasion, suggested the Federal Reserve may slow the pace of rate hikes to lessen the hit to the economy and risk of recession, only for subsequent data to show inflation is still escalating.
Markets currently anticipate a raise of at least 75 basis points for this week’s Federal Open Market Committee meeting, with a 19 per cent chance of a supersized increase of one full percentage point.
“USD can remain elevated as the FOMC continues to hike aggressively and on growing global recession risks,” and could hit a new cyclical peak above 110.8, Commonwealth Bank of Australia Strategists wrote in a client note, according to Reuters.