RBI intervention, foreign fund inflows hold rupee from sliding past 83 mark

NEW DELHI: Could rupee breach the 83-mark against the US dollar again in 2022 as it had shed some value since the start of the month and is precariously close to the 83 mark at 82.86?The rupee has been stuck in a range of 82.5-83 for over a fortnight. The Indian currency has fallen by 2% against the US dollar in December, but has not breached the 83-mark again after 20 October.

Experts believe that despite equity markets globally falling on concerns over Covid and recession, rupee has not breached the 83 level yet as a result of RBI intervention and FPI flows. Foreign portfolio investors (FPIs) have brought in net $5 billion in November and December. RBI has been intervening in the currency market and selling dollars to support the rupee. According to various estimates, RBI’s total intervention in the currency market had touched $100 billion --$34 billion in spot and $65 billion in forwards market – by October itself.

Experts, therefore, believe rupee would remain range bound unless it breaches the 83.25 level – its previous lowest. “A clear breakout can be confirmed once prices trade above 83.25, the previous all-time high on spot. Till then we are betting on rangebound price action but with an upward drift,” says a Kotak Securities note.