Day After Sharp Slip, Rupee Climbs to 87.21

New Delhi: The rupee on Tuesday (March 11) recovered to 87.21 to the dollar amid likely intervention by the RBI and gains experienced by other Asian currencies, a day after it slipped sharply to roughly 87.3.

While the rupee earlier on Tuesday fell to 87.385, it was later aided by likely dollar sales by the central bank, Reuters cited traders as saying, adding that it also gained due to weakness in the dollar. Meanwhile, the offshore Chinese yuan was up by 0.4% on Tuesday.

The dollar index, which measures the currency’s strength against a basket of six other currencies, was down by 0.5% on Tuesday and the currency itself was at its weakest compared to its major counterparts since November, the news agency also reported.

On Monday the rupee declined to around 87.3 to the dollar even as the dollar index – which last week was at its worst in four months – and crude oil prices were at relatively low ebbs.

But the rupee was dented by a continuous outflow of foreign funds as well as volatility in crude prices, PTI noted. A demand for dollars in light of the upcoming maturity of non-deliverable forwards had also pressured the rupee on Monday.

Dilip Parmar, an analyst at HDFC Securities, was quoted by the Financial Express as saying that Tuesday's recovery was supported by a weakness in the dollar brought about by uncertainty surrounding a possible recession.

“… The weakening of the greenback, fuelled by growing concerns about a potential economic downturn or recession, provided further support to the rupee,” he said.

Asked on Sunday whether he expected a recession this year, US President Donald Trump declined to offer a prediction, saying instead that “there is a period of transition because what we’re doing is very big”.

Earlier this month he had admitted that there may be an “adjustment period” as his plans to impose tariffs on trading partners went into force.

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