By Anushka Trivedi
(Reuters) – The Indian rupee held its ground on Thursday, as weakening oil prices and exporters selling dollars shielded it from a selloff in global risk assets.
The partially convertible rupee eased 0.1% to 79.5550 per U.S. dollar, having firmed up to a more than two-week high of 79.31 during the session. The currency closed at 79.45 on Tuesday, India’s financial markets were shut on Wednesday for a holiday.
Asian equities and currencies tumbled as the dollar index shot up on escalating bets that the Federal Reserve would keep rates high, but the rupee markedly stood out for not declining as much. [FRX/], [MKTS/GLOB]
“One of the reasons for the positivity is lower crude oil prices as they’re down 2.5%. In addition, some exporters may have sold dollars, and due to these things the rupee is slightly on the right side,” said Dilip Parmar, research analyst at HDFC Securities said.
He added that 79.90 could be a support level for the rupee and 79.85 a resistance, but bias for the currency is on the positive side as a host of recent data has been encouraging.
Factory activity in India grew robustly again in August as compared to other Asian exporting hubs China, Japan and South Korea that saw a significant slowdown, monthly purchasing managers index data indicated.
Moreover, data released on Wednesday showed India’s economy grew 13.5% in the June quarter, missing a Reuters estimate but still coming in at its fastest pace in a year.
However, near-term risks from the Federal Reserve monetary policy meeting this month loom as markets price in chances of a 75-basis-point rate hike, sending U.S. yields to a two-month high of 3.2%.
The benchmark 10-year Indian government bond yield also ticked up 2 basis points to 7.2146%, reversing three sessions of falls ahead of ahead of Friday’s debt sale.
(Reporting by Anushka Trivedi in Mumbai; Editing by Shailesh Kuber)