The Indian rupee ended largely steady on Monday after touching a near 9-1/2 month low, as US dollar selling by exporters helped offset the weakness seen due to lower Asian currencies and global growth concerns.
Sentiment also remained cautious ahead of the central bank’s monetary policy review on Tuesday.
All emerging Asian currencies hit new lows on a day when Moody’s downgraded Japan’s sovereign credit rating stating “heightened uncertainty over the achievability of fiscal deficit reduction goals.”
Meanwhile, the dollar continued to be boosted by oil’s longest losing streak since the 2008 financial crisis. On Monday, oil prices extended from last week their steep sell-off after OPEC decided not to cut production, keeping markets well supplied.
“Asian units are reacting to the commodity deflation feeding into the strong dollar trend, apart from the fact that global growth is going down the tube,” said Anindya Banerjee, a currency analyst at Kotak Securities in Mumbai.
Traders are now bracing up for the Reserve Bank of India’s policy review amid rising expectation of a cut in policy rates despite most analysts in a Reuters poll expecting the central bank to maintain status quo.
The partially convertible rupee closed at 62.02/03 per dollar versus 62.0250/0350 on Friday. It hit a low of 62.25 intraday, its weakest since Feb. 20.
Traders said dollar sales by exporters and custodian banks helped the rupee recover from session lows.
In the offshore non-deliverable forwards market, the one-month contract was at 62.36, while the three-month was at 62.87.