Indian rupee escapes record lows

The somewhat convertible rupee was trading at 77.63/64 per dollar by 0805 GMT, corresponding with its close of 77.45 on Friday. The rupee brushed a record low of 77.7975 during the session.

Traders spoke the central bank started selling dollars via state-run banks at about 77.75 rupee levels helping the currency regain some ground.

Traders expressed that the RBI has been active in both spot and futures markets in recent weeks to limit sharp volatility in the rupee.

Analysts expressed the recent uptick in global and domestic inflation had counted to bearishness on the currency while also pushing up bond yields.

As government data showed on Tuesday, India’s annual wholesale price inflation revved to 15.08% in April from the previous month’s 14.55%, remaining in double-digits for the 13th month.

In April, consumer price index-based inflation increased more than expected to 7.79% from a year earlier, staying above the central bank’s tolerance band of 6% for the fourth month, as data last week revealed.

A further slide in rupees prevented

Economists believe the high inflation print may push the RBI’s hand into raising rates again in its June policy review after suddenly raising it by 40 basis points in an out-of-turn meeting earlier this month.

India’s benchmark 10-year bond yield was trading at 7.36%, up to four basis points on the day.

Brent crude futures dropped 18 cents, or 0.16%, to $114.06 a barrel by 0726 GMT.

The rally in Indian shares after losses in current sessions helped prevent a further slide in the rupee. The benchmark BSE share index and the broader NSE index were higher by more than 2%.

Foreign funds, however, have been selling India’s stocks and debt. They are net sellers of more than $20 billion worth of shares and around $2 billion in debt in 2022.