Rupee Gains Support After Moving Past 68 Against Dollar; RBI's Intervention Suspected

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The sentiment in the dollar-rupee exchange was hit on Tuesday as the Narendra Modi government failed to form a majority in Karnataka state. Thus to curb further free-fall of the domestic currency which has already moved past 68 level on Tuesday and Wednesday's early trade hours, dealers have hinted of RBI's intervention through state-run banks' sell off of dollars.

Rupee Gains Support After Moving Past 68 Against Dollar; Closes At 67.79

On Wednesday rupee closed after strengthening against the dollar at 67.79. Meanwhile other Asian currencies including Indonesia's rupiah are under pressure after the US dollar has strengthened due to rising US yields.

The benchmark 10-year bond yield softened a bit by 2 bps to 7.89% after reaching an earlier high of 7.92%, the level last reached in June 2015. The yield has been on a upward trajectory due to increasing oil prices which has raised inflationary concerns.

The rupee has been the worst Asian currency so far with erosion of as much as 4% in value in the current quarter. And as the forex reserves of the country have declined for the past few weeks by as much as $7 billion, it is highly likely that RBI would have intervened to render the currency at stable levels.

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