There was little change in the Indian Rupee on a week-on-week basis, as it was able to steer clear of the losses recorded by other Asian peers because of the dollar index rally, as foreign banks sold the dollar.
On Friday, there was a marginal decline in the rupee against the US dollar to 82.04 and it had recorded gains in the week of about 0.1%.
This week saw the local currency trade between the 81.60 and 82.30 range. On Wednesday, it reached the lowest value this week at 82.30 after comments from the Fed chair, Jerome Powell.
His hawkish comments increased the possibility of a 50 basis points increase in the interest rates in the Fed meeting scheduled for this month.
His comments saw a rise in the US dollar index and US yields. But, consistent sales of the US dollar by a prominent foreign bank helped the rupee record a recovery.
Traders said that the foreign bank’s sales had likely been on behalf of offshore and custodial clients. Therefore, the Indian rupee was able to shrug off the impact of the mostly hawkish comments from Powell.
Amongst other Asian currencies, the rupee had the upper hand due to foreign investment and portfolio flows.
This month has seen Indian equities record inflows of about $1.71 billion, as opposed to outflows in the two previous months.
As compared to the performance of the rupee this week, there was a decline in the Korean won by 2% and a 1% fall was also recorded in the Chinese yuan.
This week has seen the dollar index record gains of about 0.7% so far. Asian currency movements will also depend on the US jobs data due later on Friday as well as the inflation data due next week.
This week, Powell signaled that the incoming data would determine whether the Fed needs to boost the interest rate by 25 basis points or 50 basis points.
The Federal Reserve is scheduled to meet this month on March 21st to March 22nd and a lot hinges on the decision.