India’s Rupee traded little changed against the US Dollar on Thursday, while disregarding a drop in China’s Yuan and other Asian currencies, with investors betting the nation’s central bank will keep intervening to defend the currency.
The Reserve Bank of India has been frequently intervening in the non-deliverable forward market to ensure the Rupee does not plummet to new record lows.
“The RBI intervened on NDF in the morning (before local over-the-counter, OTC, markets opened) and it did the same yesterday,” the head of treasury at an unspecified private sector bank was quoted as saying by Reuters.
“The idea here, it seems, is to set the tone for the day and to let speculators know that they are there and are watching.”
The Indian currency had registered a record low of 83.29 against the dollar in October 2022.
The Yuan and other Asian currencies retreated as US bond yields surged on Wednesday in the wake of upbeat services sector data. The latest report by the Institute for Supply Management showed US services sector activity had expanded at the sharpest rate since February in August.
The Non-manufacturing Purchasing Managers’ Index came in at a reading of 54.5 in August up from 52.7 in July.
The US Dollar Index was last little changed at 104.857, while being in proximity to a six-month high.
The yield on US 2-year Treasury Notes was last at 5.008%, after surging to 5.0350% on Wednesday.
As of 7:10 GMT on Thursday USD/INR was inching down 0.05% to trade at 83.1340.
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