The Indian rupee exhibited some resilience on Thursday, registering a slight gain against the UAE dirham. This uptick comes even as most Asian currencies faced depreciation due to rising US bond yields.
The rupee opened at 83.49 against the US dollar, translating to 22.75 dirhams. This marks a small improvement compared to its closing rate of 83.5175 (22.76 dirhams) the previous day.
Market experts attribute this development to potential dollar inflows into India. However, the overall sentiment remains tempered as the dollar index strengthens at 105.5. This rise is accompanied by a decline in other Asian currencies, with the Korean won leading the losses by 0.3%. Additionally, the 10-year US Treasury yield climbed above 4.5% in Asian trading hours.
While there seems to be some dollar buying interest at current levels, analysts predict the rupee will likely stay within its recent range of 83.40 and 83.50. This stability stems from a balancing act. On one hand, there’s consistent dollar demand from Indian importers, particularly oil companies. On the other hand, expectations of intervention by the Reserve Bank of India (RBI) prevent traders from pushing the rupee towards its record low of 83.5750, set in April.
“India’s economic fundamentals and substantial foreign exchange reserves provide a safety net,” says Amit Pabari, managing director at CR Forex, an FX advisory firm. This strong foundation empowers the RBI to counteract any significant downward pressure on the rupee.
The focus now shifts towards the release of US jobless claims data later today. This data will offer valuable insights into the health of the US labor market, following last week’s report indicating a lower-than-expected number of new jobs added in April. Investors are keenly observing these developments to gauge the potential impact on global markets and currency valuations.
