The Indian rupee climbed to a more than six-month high on Monday, boosted by inflows and an uptick in its Asian peers.
The rupee hit an intraday high of 82.65 against the U.S. dollar, its highest since early-September, and was quoted at 82.6725 at 12.24 p.m. IST, up from its previous close of 82.7850.
The “significant influx” of funds into India debt, coupled with anticipated year-end repatriation inflows from corporates, could further drive down the USD/INR exchange rate, said Anindya Banerjee, head research – FX and interest rates at Kotak Securities.
Without “aggressive intervention” from the Reserve Bank of India (RBI), we may witness a cascade of long dollar liquidation from speculators, rebalancing dollar sales from put sellers, and hedging from exporters, he said.
There was significant interest to sell dollar/rupee at the daily reference rate, traders said. The daily fix, which itself is traded, was at a discount, meaning that dollar sellers were willing to take a rate lesser that the fix rate.
The rupee was also helped by strength in its Asian peers amid a drop in U.S. Treasury yields. The Korean won climbed 0.8% and the Indonesian rupiah advanced 0.4%.
The closely watched U.S. jobs report out on Friday was mixed. While job additions for February surpassed expectations, the January payrolls witnessed a significant downward revision.
Further, the unemployment rate rose to a two-year high and wage growth was softer than what economists had expected.
Focus now turns to the U.S. February inflation data due Tuesday. The data comes on back of the higher-than-expected January inflation print.
