However, with the Federal Reserve determined to keep interest rates higher for longer, even as recession looms in the world’s biggest economy, it could boost near-term volatility, analysts warned. The dollar index losing steam ahead of US jobs data also lifted market sentiment. The rupee’s strength on Tuesday comes after the Reserve Bank of India (RBI) stepped in to prevent the currency from trading under 80% in the previous session, traders had told Reuters. “While we think the USD/INR pair can still rise further, we see scope for the rupee to outperform some other “deficit” peers temporarily,” they wrote in a note. HSBC analysts became more optimistic about the rupee, citing a pullback in commodity prices and return of inflows supporting the currency, in addition to support from the country’s central bank. On the day, yield on the 10-year paper dropped 6 basis points to 7.1893%. Overall, local equities have seen foreign investor inflows of about $6 billion in August, the highest since December 2020.Īugust also marked the first month this year when overseas investors turned net buyers of India‘s government debt. India‘s Nifty 50 stock index soared 2.7% as investors returned to buy the dips after a recent selloff. The currency had hit a record low of 80.12 on Monday, but closed at 79.9625. The partially convertible rupee surged 0.6% to 79.45 in its best session since August 27, 2021.
The Indian rupee notched its biggest one-day gain in a year on Tuesday, August 30 against a wobbly dollar as local equities saw a rush of foreign investor inflows.
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