The Indian rupee was extremely volatile in trade this week. In fact, the currency closed lower at 74.74 to the dollar.
"The week has been very volatile and rupee has depreciated nearly 2.5% on unprecedented bond buying plan by the RBI. Had the movement been dollar index driven, we wouldn't have seen such a sharp depreciation in the rupee. Again next week is a truncated week with two currency holidays, so we can expect the optimism over dovish Fed to limit the fall in rupee with focus on India's CPI data and impact of Covid's second wave. In USDINR spot RBI is seen intervening in the spot around 74.95 zone, so we can expect the spot to trade within 74.25-75.25," says Rahul Gupta, Head Of Research- Currency, Emkay Global Financial Services.
The volatility in the currency is here to stay and the RBI may step in next week to keep the currency less volatile.