The bank in a report said that the Indian rupee opened last week on a positive footing led by softness in the US dollar ahead of the CPI inflation and weaker crude oil prices
The Kotak Mahindra Bank on Monday said that US dollars and the Indian rupee will trade between the 79 to 81 range in the near term as markets continue to reassess the impact of slowing demand and elevated inflation.
The bank in a report said that the Indian rupee opened last week on a positive footing led by softness in the US dollar ahead of the CPI inflation and weaker crude oil prices.
However, higher than expected US CPI inflation reading prompted a resurgence in the greenback as markets reversed the probability of a softer stance by the Federal Open Market Committee (FOMC).
The emerging market currencies further came under pressure amidst risk-off as International Monetary Fund (IMF) and World Bank flagged an increasing risk of recession causing a sharp global equity sell-off.
“Following recent trends, RBI’s intervention seemed to have again capped the fall of Indian rupee to above 80 levels. The Indian rupee closed the week 0.2 per cent weaker at 79.75,” the report stated
In July, the RBI purchased USD 19.7 billion and sold USD 38.8 billion in spot FX markets amounting to a net dollar sale of USD 19 billion.
RBI’s net long forward position was at USD 22 billion in July with a net short position of USD 11.9 billion in the up to the one-month bucket and net long positions of USD 10.3 billion in 1-3 months bucket, USD 13.5 billion in the 3-12 months bucket, and USD 10.1 bn in the more than 1-year bucket.
Additionally, FX reserves for the week ending September 9 fell by USD 2.2 billion to USD 550.9 billion. Till date in FY2023, FX reserves have fallen by USD 55.6 billion, as per the bank.