Rupee Hits Six-Week High Amid Exporter Flows and Offshore Dollar Selling
The Indian rupee staged a significant recovery on Thursday, climbing to a six-week high for the second consecutive day. Despite initial volatility caused by a hawkish stance from the U.S. Federal Reserve, a combination of exporter activity and offshore dollar selling helped reverse early losses.
Reversal Against Fed Hawkishness
The rupee’s journey during the session was a tale of two halves. At the market open, the currency faced immediate pressure, dropping to 94.70 against the U.S. dollar. This weakness was triggered by a surge in U.S. Treasury yields following the Federal Reserve's latest policy statement.
The Fed signaled a more aggressive tightening cycle than many analysts had anticipated, with nine out of 18 policymakers projecting rate hikes. This shift increased the odds of a rate hike as early as next month to approximately 25%. Market expectations have since adjusted significantly, with traders now pricing in 32 basis points of rate hikes this year, up from the previous estimate of 19 basis points.
Exporter Activity and Offshore Dollar Selling
The momentum shifted mid-session as the rupee rallied to an intraday high of 94.2175, its strongest level since May 7. The recovery was driven by two primary factors: aggressive inflows from Indian exporters and a wave of offshore dollar selling.
Currency traders noted that exporters were actively selling dollars, which put downward pressure on the USD/INR pair. Additionally, there appeared to be a tactical unwinding of long dollar positions in offshore markets, providing the necessary liquidity to push the rupee higher. By the end of the session, the rupee was quoted at 94.2925, marking a 0.25% gain for the day.
The Role of Declining Oil Prices
A significant tailwind for the Indian currency has been the downward trend in global energy prices. As a major oil importer, India benefits directly from lower crude costs, which eases the pressure on the current account deficit and supports the rupee.
The impact was evident as Brent crude futures fell 2.5% in Asian trade, dropping to $77.58 per barrel. This decline followed news of an interim peace deal signed between the U.S. and Iranian presidents, which helped stabilize geopolitical tensions and cooled the energy markets.
Poin-Poin Penting
- Tertinggi dalam Enam Minggu: Rupee mencapai level tertinggi intraday di angka 94,2175, didorong oleh aliran dana eksportir dan pelepasan posisi dolar offshore.
- Dampak Kebijakan Fed: Meskipun kebijakan Federal Reserve yang hawkish meningkatkan ekspektasi kenaikan suku bunga menjadi 32 basis poin tahun ini, rupee berhasil mengatasi kerugian awal.
- Dukungan Minyak Mentah: Penurunan harga minyak mentah Brent sebesar 2,5% menjadi $77,58 per barel memberikan dukungan krusial bagi mata uang domestik.