Later, the price slid through the 90 level and closed 0.3% weaker at 90.1950, the lowest close in two weeks.Heavy demand for dollars from oil importers weighed on the currency during the session, while a U.S. holiday on Thursday thinned liquidity and amplified moves, traders said.
During New Year’s Eve week, the rupee fell 0.4% in thin trade after falling 0.65% last week.
“Markets will be watching closely for signals on how tolerant the RBI remains towards currency movements, the scale and timing of its interventions and the use of instruments such as currency swaps and liquidity operations,” said Kunal Sodhani, head of finance at Shinhan Bank India.
He further said that the path of the currency will largely be determined by external forces and the RBI’s response. Meanwhile, the perception that the Reserve Bank of India wants to avoid a breach of 90, a level that came into focus in the last sessions of the year after sharp gains from record levels, has been further strengthened.
Market participants have continued to test the level, indicating that underlying dollar demand remains robust and the risk of a broader move beyond 90 remains on the table despite the RBI’s presence.
Most Asian currencies were behind on the day, providing little support to the rupee.
#rupee #falling #falling #week #demand #dollar #exceeds #support #RBI