India Rupee Off Highs On Suspected RBI Intervention

Tuesday,   24-Nov-2020   01:22 PM (IST)

The Indian rupee came off highs against the U.S. currency, as dollar buying by state-run banks, speculated on behalf of the central bank offset the impact of an improved regional risk appetite. The rupee was quoting at 74.01 to the dollar compared with 74.10 in the previous session. The currency had opened little changed, but dollar sales by two foreign banks helped it inch to 73.88, the highest since Nov. 9. The Reserve Bank of India has been repeatedly intervening in the forex market to curb the rupee’s appreciation, absorbing foreign portfolio inflows that totaled more than $7 billion into local equities. The pickup in foreign fund inflows has been attributed to India’s better economic outlook and to MSCI implementing a new regime on foreign ownership limits. Traders are expecting inflows of around $2.5 billion following the change in foreign ownership limits. The MSCI India’s weight in MSCI EM (emerging market) will increase to 8.8% from the current level of 8.1%. The benchmark BSE Sensex rose 0.8%, hovering near record highs and adding to its more-than-11% rally so far this month. Asian equities were mostly higher while futures on the S&P 500 Index indicated that the gauge could add to yesterday’s advance after the Trump administration formally authorized U.S. President-elect Joe Biden’s transition process. President Donald Trump had delayed the formal beginning to the transition amid his refusal to concede, a development that analysts were worried could have an adverse impact on the economy and complicate the distribution of coronavirus vaccines. Reports that Biden is expected to tap Federal Reserve’s former Chair Janet Yellen for U.S. Treasury secretary also helped boost investor sentiment. Yellen has called for additional fiscal spending to revive the economy wracked by the coronavirus pandemic. The dollar index inched lower to 92.42. Asian currencies were trading mixed. Brent crude was 0.8% higher at $46.43 per barrel, near its highest level in almost three months and extending yesterday’s 2.4% advance.