The rupee gained some ground on Tuesday as the dollar steadied after rising significantly overnight, even as risks from renewed Covid restrictions in China rose and could cause supply chain disruptions.
According to Bloomberg, the rupee was last at 81.6512 per dollar after opening at 81.6963, compared to its previous close of 81.8475.
PTI reported that the rupee gained 12 paise to close provisionally at 81.67 against the US dollar.
The domestic currency traded in the 81.6537 to 81.8300 range, suggesting more gains for the rupee on Tuesday.
“The Indian rupee marked the first gain in the last five days as a gauge of the dollar index halted a three-day gain after some US policymakers struck a cautious note about further aggressive tightening moves,” Dilip Parmar, Research Analyst at HDFC Securities told PTI.
The rupee was also supported by a recovery in domestic equities and stronger Asian currencies.
Tuesday saw more tightening of restrictions in Beijing and abroad, but traders believe that the losses on the previous day were sufficient.
The dollar was down 0.2 per cent after giving up some of the gains that took it to a 10-day high on Monday as investors fled risky assets due to rising Covid cases in China.
“What’s going on in China is going to take centre stage,” Joseph Capurso, Head of International and Sustainable Economics at Commonwealth Bank of Australia, told Reuters.
“There does seem to be some…increased restrictions on the movement of people, and I think there’s going to be inevitable economic impacts.”
Investors, though, broadly shrugged off the China news ahead of the minutes of the Federal Reserve’s latest meeting scheduled to be released on Wednesday.
Analysts at National Australia Bank questioned whether demand for the US currency would last.
“Evidence US inflation has peaked and can fall significantly in 2023, together with China and Europe developments, convince us a USD depreciation cycle is now in train,” they said in a note on Tuesday.
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