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The rupee opened marginally weaker against the US dollar on August 23, ahead of the key Jackson Hole speech of the US Fed chair for further guidance on rate hikes.
At 9.10am, the home currency was trading at 82.99 a dollar, down 0.08 percent from its previous close of 82.93. The home currency opened at 83.01 to a dollar.
Recent RBI data indicates a shift in the banking system liquidity from a surplus of over Rs 3.5 lakh crore to a deficit of Rs 23,644.43 crore. Traders anticipate ongoing liquidity pressure due to upcoming outflows from advance tax payments. To counter this, RBI might use VRR auctions (variable repo rate) to infuse liquidity into the banking system.
“It will be interesting to see how the RBI curbs the depreciation in the rupee on one side by selling dollars while maintaining liquidity on the other side. All in all, with robust inflows from FII’s as well as FDI’s and RBI’s intervention, rupee losses are likely to remain limited to the 83.15-83.25 zone. Going forward rupee is likely to move towards 82.50-82.20 levels once 82.90 is taken out,” said CR Forex note.
According to Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP, the rupee will remain in a range, given a fall in the yuan and dollar in-flows keeping it in a well defined range as the RBI sells greenback near to 83.10.
Asian currencies were trading mixed ahead of federal reserve chair Jerome Powell’s speech at Jackson Hole on Friday.
Thai baht rose 0.32 percent, Japanese yen and China renminbi 0.14 percent each, and Singapore dollar gained 0.09 percent. Among losers, Philippine peso fell 0.15 percent, Malaysian ringgit and South Korean won 0.1 percent each, while Indonesian rupiah lost 0.06 percent.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 103.507, down 0.05 percent from its previous close of 103.563.
With Reuters and Bloomberg inputs
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