Today morning some foreign institutional investors (FIIs) bought orders and the rupee quite gently moved on to 64.11/USD, which was the costliest that the dollar traded
On Tuesday morning the rupee fell to an all time low of 64 to the dollar. Most analysts were expecting this to happen by the end of this year, but happened way ahead of estimates.
There was a very clear downward drift in the money markets. Today morning some foreign institutional investors (FIIs) bought orders and the rupee quite gently moved on to 64.11/USD, which was the costliest that the dollar traded.
There seems to have been offers at that point, which came from state-owned banks. It is tough to say whom they were selling for as they don’t easily admit it, it is quite possible that they would have sold it for exporters. There could be some exporters who would think that 64/USD is a good rate and sold off a bit. Corporate who have dollar earnings could have sold off, but it is usual for the markets to suspect that it is on behalf of the Reserve Bank of India (RBI).
Apparently, there were sell orders also at about 63.85/USD levels and the dollar became as cheap as 63.50/USD in 10-15 minutes of trading. However, FIIs buying today is coming synchronous with their buying dollars across several emerging markets (EMs). There is a big whack seen coming in for the Indonesian markets as well. However, some trades are even worse than India because 30 percent of their government debt is owned by FIIs.
So, there, it is a slightly more risky when the FIIs start selling off debt and buying dollars, which appears to have happened because of the sharp rise in US yields. Other currencies, which are certainly not current account deficit (CAD), like the Singapore dollar, also got impacted. Basically, it was a story of a strong dollar and weak emerging market currencies.
On Tuesday morning the rupee fell to an all time low of 64 to the dollar. Most analysts were expecting this to happen by the end of this year, but happened way ahead of estimates.
There was a very clear downward drift in the money markets. Today morning some foreign institutional investors (FIIs) bought orders and the rupee quite gently moved on to 64.11/USD, which was the costliest that the dollar traded.
There seems to have been offers at that point, which came from state-owned banks. It is tough to say whom they were selling for as they don’t easily admit it, it is quite possible that they would have sold it for exporters. There could be some exporters who would think that 64/USD is a good rate and sold off a bit. Corporate who have dollar earnings could have sold off, but it is usual for the markets to suspect that it is on behalf of the Reserve Bank of India (RBI).
Apparently, there were sell orders also at about 63.85/USD levels and the dollar became as cheap as 63.50/USD in 10-15 minutes of trading. However, FIIs buying today is coming synchronous with their buying dollars across several emerging markets (EMs). There is a big whack seen coming in for the Indonesian markets as well. However, some trades are even worse than India because 30 percent of their government debt is owned by FIIs.
So, there, it is a slightly more risky when the FIIs start selling off debt and buying dollars, which appears to have happened because of the sharp rise in US yields. Other currencies, which are certainly not current account deficit (CAD), like the Singapore dollar, also got impacted. Basically, it was a story of a strong dollar and weak emerging market currencies.
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