Rupee erases early losses but still trading lower at 73.68 per dollar

We reckon that the RBI will prefer to keep the rupee exchange rate stable between the 73 to 74.50 band for quite some time now, says Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking.

Moneycontrol News

December 21, 2020 / 11:11 AM IST

rupee

Indian rupee erased some of early losses but still trading 11 paise lower at 73.68 per dollar, amid volatile trade seen in the domestic equity market.

It opened 18 paise lower at 73.75 per dollar against Friday's close of 73.57.

At 11:08 IST, the Sensex was down 28.05 points or 0.06% at 46932.64, and the Nifty was down 17.50 points or 0.13% at 13743.00.

Oil prices slid in early trade on Monday as a fast-spreading new coronavirus strain in the United Kingdom raised concerns that tighter restrictions there and in other European countries could stall a recovery in the global economy and its need for fuel.

Value erosion in dollar, excessive liquidity is driving foreign investors to bet 'big on Indian equities, which give the rupee a slight appreciating bias in the near term. However, 73.20-73.00 remains a strong hurdle for the rupee, and with RBI standing in the way, bouts of large-scale appreciation can be ruled out," said Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking.

"We reckon that the RBI will prefer to keep the rupee exchange rate stable between the 73 to 74.50 band for quite some time now," she added.

The dollar climbed against major peers on Monday with investors seeking its relative safety as many countries tightened COVID-19 lockdowns.

"Despite the weakening dollar, the USDINR remained close to its highest Put base of 73.50. We believe these levels will be tough for the pair to breach on downsides and buying can be seen from here, said ICICIdirect.