The rupee gained a touch on Thursday against a steady dollar as oil dipped, driven by a weak demand outlook on China’s Covid spike, even as optimism over easing restrictions there turned to caution after a rapid surge in cases.
According to Bloomberg, the rupee was last at 82.8050 per dollar, compared to Wednesday’s close of 82.8663.
PTI reported that the domestic currency settled provisionally flat at 82.80 against the US dollar.
In the previous session, the rupee had ended nearly flat buoyed by support from the Reserve Bank of India after it dropped to a one-month low of 82.9225 on Wednesday.
The 82.80-82.90 range continued to serve as a significant support area for the currency, as it has over the past two weeks.
“The USDINR pair to remain in the range of 82.50 to 83.00 with the RBI protecting the 82.90 level and dollar demand from oil companies weighing on the domestic currency. While quarter-end supplies could bring the pair down a bit, overall global recession concerns continue to hamper any significant recovery in the rupee,” said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors.
Meanwhile, crude prices fell as rising COVID-19 cases in China dampened expectations for a revival in fuel demand.
“The lack of clarity over the virus situation in China has prompted some new travel rules from various countries, which could serve as some dampener for previous optimism,” Jun Rong Yeap, Market Strategist at IG, told Reuters.
“Heading into 2023, there are chances for oil prices to rebound, but it will still boil down to the pace of China’s reopening and whether market participants have priced for the growth risks as a trade-off to tighter central bank policies,” he added.
Still, the rupee failed to gain significantly due to the low trading volume through the holiday season. With just one session left, investors were cautious and warned that it would be difficult to predict a clear direction.
Although a drop in crude prices could be modestly encouraging, the currency is still following the dollar and is likely to consolidate in the current range; a foreign exchange dealer told Reuters.
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