Rupee logs worst day in two weeks on likely dollar outflows

Indians rupee Tuesday closed lower, its worst day in two weeks, weighed by potential dollar inflows for businesses and weakness in the Chinese currency.

The rupee closed down 0.21% at 82.1175 per dollar, compared to 81.9350 in the previous session.

Tuesday’s move was mostly a reflection of potential money outflows and a weaker Chinese yuan, said Dilip Parmar, research analyst at HDFC Securities.

Parmar added that the USD/INR will see resistance around 82.30-82.40 levels.

Indian stocks saw two large sell-offs on Tuesday. Sale of British asset manager Abrdn plc $432 million stake in HDFC Asset Management Cowhile Timken India’s parent company in Singapore sold a $231 million stake.

Also read: Bank Nifty Forecast Today – 20 June 2023: In Critical Rule

With the exception of a few share sales, money flows into equities have been fairly strong, which has helped the rupee to be mostly stable.

“Continuing trends in supply chain relocation should continue to boost foreign direct inflows, while India’s relatively low exposure to slowing global growth should help guide portfolio inflows,” Barclays said in a note.

“We don’t expect USD/INR to breach 83 levels even if the broad dollar strengthens. Dollar demand is unlikely to be significant, in our view, and should be easily offset by RBI dollar sales.”

Meanwhile, the offshore Chinese yuan also fell below 7.18 against the dollar, dragging some Asian currencies lower.

The dollar index was mostly flat at 102,460 on the back of a weaker external yuan.

The dollar awaits US Federal Reserve Chairman Jerome Powell’s testimony before Congress on Wednesday and Thursday for guidance on interest rates, after Hawk pause last week.