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Rupee snaps 11-week falling streak as RBI moves

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On Tuesday, the rupee had touched a lifetime low of 80.0650.

Mumbai:

The Indian rupee on Friday broke an 11-week fall, benefiting from the intervention of the Reserve Bank of India after it fell from the 80-per-dollar mark.

The partially convertible rupee closed slightly stronger at 79.8550 on Thursday as compared to its close of 79.9450 and last Friday’s close of 79.8775.

India’s central bank has zero tolerance for volatility and volatility in the rupee and will continue to engage with the foreign exchange market to ensure that the rupee regains its proper level, its chief Shaktikanta Das said on Friday. .

Traders said the rupee hit a lifetime low of 80.0650 on Tuesday, but heavy dollar selling by state-run banks by RBI has helped limit further losses in the currency.

Indian bond yields edged lower on Friday after the European Central Bank (ECB), tracking the slide of its US peers, focused on a possible global slowdown.

India’s benchmark 10-year bond yield was trading at 7.41% as compared to Thursday’s close of 7.44%. In the week, the 10-year yield fell 2 basis points.

US Treasury yields fell on Thursday, below 2.9% on the benchmark 10-year note, weighed down by softer economic data and after the ECB’s first interest rate hike in 11 years. [US/]

Traders said Indian bond yields were trading in a narrow range amid mixed global factors and the upcoming monetary policy review in early August.

In a note, DBS said that despite recent indications that inflation may be peaking, it was premature to ease on inflation as a previous RBI study showed that a 5% depreciation in the rupee versus their baseline estimate would put inflation at around Rs. Can extend up to 20 bases. numbers and vice versa.

According to the monetary policy report published in April, RBI’s baseline rupee projection was 76 per dollar.

“It also illustrates the central bank’s priority to stabilize the exchange rate so that supply-side pressures do not increase,” said Radhika Rao, economist at DBS.

DBS now expects the key rate hike by the RBI in its August meeting by 35 basis points, from 50 bps earlier.

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