Rupee Crosses 83 Mark Against US Dollar For First Time Since October 2022; What Should Investors Do?

Indian rupee crossed the 83 mark against the US dollar for the first time since October last year. This is due to a rise in US yields which pressured Asian currencies at the interbank forex market on Monday. Also, the dollar index hit its highest level since July 7, while the Japanese Yen breached the critical 145 level. Further, sharp selling in the domestic market also dampened the mood.

The rupee hit an intraday low of 83.09 against the US dollar in the opening bell.

Currently, the local unit traded at 82,9850, down from the last week's Friday print of 82.8025.

The domestic currency opened at 82.96 against the dollar.

A dealer told Reuters that clearly, it's all about the RBI (Reserve Bank of India). The dealer added, "If the RBI does not push it (USD/INR) below 83, you will see a decent-sized move higher."

RBI has been intervening in both spot and forward positions under the forex market to tackle the rupee's depreciation since May last year.

Anand James, Chief Market Strategist at Geojit Financial Services said, "India's foreign exchange reserves fell by $2.4 billion in the week ended August 4, reflecting dollar outflows as cautious offshore investors sold their holdings in the domestic equities market."

James highlighted that the US Dollar Index (DXY) is trading at 102.90, having surpassed a five-week high in the early hours of Monday's Asian session. Dollar is up by 1% for the month.

Meanwhile, the Japanese yen hit a low of 145.22 per dollar in the early hours, which was the lowest level since November 10 of last year. However, some retreat in selling was seen later on as the yen traded currently at 144.91 against the dollar, as against its previous closing print of 144.96.

Furthermore, the Australian dollar dipped by at least 0.5% to $0.647, while the Kiwi shed 0.4% to $0.596. Overall, Asian currencies have dropped by over 0.5%.

The US 10-year treasury notes jumped to 4.18%. James said, "Treasury rates in the United States climbed on Friday as traders weighed a slightly higher-than-expected gauge of wholesale inflation."

On the technical outlook for the rupee during Monday's trade, James said, "USDINR's dips to 82.65 found enough support last week, raising hopes of reviving upswing attempts towards 82.90. But, we will wait for a clean break of 83.26 before playing directional upsides. Alternatively, fall back below 82.4 will puncture upside hopes."

Coming to Indian markets, the Sensex fell by at least 501 points to hit an intraday low of 64,821.88. While Nifty 50 dipped by 170.4 to touch an intraday low of 19,257.90.

On markets performance, Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, "The market construct has turned a bit negative. The spike in the dollar index to 103 and the U.S. 10-year bond yield rising to 4.18 are negative for capital flows to emerging markets. The FPI sell figure of Rs 3073 crores last Friday is in tune with these negative trends."

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