On Friday , Rupee seems start session with firm note between 72.75 - 72.82 levels as FII continue pouring dollar to Indian market as well as greenback headed for its first losing week in three as new signs of weakness in the U.S. jobs market dented investor expectations about the pace of a pandemic recovery.
On Last Trading Session , Market witnessed USDINR break 72.74/75 levels last seen on 20th September 2020, Intraday pair opened at 72.80/81 levels , then try to recover till 72.8750/8850 levels but failed and hit intraday lows at 72.66/67 levels before finished at session at 72.86/87 mark.
INTRADAY RANGE - 72.50 ( 72.68 - 72.93 ) 73.14
The Reserve Bank of India (RBI) adopted a strategy to shift some of its currency intervention to the forwards market. The RBI’s outstanding forwards book grew to $28.3 billion as of November from a negative $4.9 billion in the fiscal year 2019-20, highlighting the extent of its operations.
The rise in forward premium is also deterring importers to hedge their currency exposure while also impacting stable inflows into the bond market.
That’s pushed the 12-month implied yields, which typically reflect the interest rate differential between India and U.S., to the highest in more than four years, fueling further inflows.
It’s balancing act to keep the rupee stable amid heavy foreign inflows while also keeping excess liquidity in check is flooding the market with more foreign funds, prompting a vicious cycle of interventions.
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