By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee strengthened to 88 per U.S. dollar on Tuesday, lifted by offshore position trimming and a recovery in local shares.
The currency was last at 88.0050, up 0.2% from Monday’s close. It hit an intraday high of 87.9550 on the interbank order-matching system.
The 87.95 level is seen an important support for the dollar/rupee pair since it was the previous record high before being breached last Friday.
“I will be very surprised if we break below 87.95 and hold,” said a currency trader at a private bank. “That would nullify the immediate upside bias, which doesn’t make sense considering the current news flow.”
The dollar/rupee had slipped in the non-deliverable forward market before domestic trading began, and the “markets here followed through”, he added.
An FX salesperson at the same bank said the recovery in Indian equities was helping the rupee “at the margin” and “maybe there is a one-off inflow via foreign banks.”
India equities rose on Tuesday, adding to Monday’s rally.
Bankers said equity moves have recently played a smaller role in driving the rupee.
However, when the currency trades at record or near-record levels its sensitivity to stock market swings increases, adding to intraday volatility.
Meanwhile, Asian currencies were steady on Tuesday with investors awaiting U.S. data that could shape expectations for Federal Reserve rate cuts this year.
The focus is on two key releases — the August jobs report and the inflation print — both due before the September 16–17 policy meet.
(Reporting by Nimesh Vora; Editing by Nivedita Bhattacharjee)
