Positive start for the Rupee as it rises by 29 paise to 80.52 per Dollar

The rupee started the week strong, building on its gains from the previous week against a battered dollar.

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The rupee began the week on a strong note, extending its gains from the previous week versus a battered dollar and continuing the momentum initiated by softer-than-expected US inflation figures the previous week.

According to Bloomberg, the local currency last traded at 80.52 per dollar after opening at 80.54, down from Friday’s finish of 80.81.

Asian currencies had a strong start to the week, continuing the trend set by last week’s softer-than-expected US inflation figures.

The rupee is certainly gaining momentum, but chasing the USD/INR pair lower from these levels “makes little sense” in terms of risk-reward, a trader at a Mumbai-based bank told Reuters.

The rupee has already recovered more than 3% from record lows, and the dealer said that “then you have to consider oil prices.”

However, the US dollar maintained steady on Monday after suffering a significant decline the previous week as Federal Reserve Governor Christopher Waller announced that the central bank was continuing its fight against inflation on Sunday.

Due to slightly lower-than-expected inflation statistics released on Thursday, the dollar index dropped 3.6% over two sessions last week, marking its worst two-day percentage drop since March 2009.

Global equities increased as money poured into risky investments on the belief that the Fed would slow rate hikes when inflation reached its peak.

The two-year Treasury yield dropped by 30 basis points on Friday, the most in a single day since 2008.

Carol Kong, a currency strategist at Commonwealth Bank of Australia, told Reuters, “I think the market got a little ahead of itself.” She added that Fed officials will likely give the market a reality check, helping the dollar regain some of its most recent losses.

Mr. Kong predicts that US inflation will likely remain high and that the Fed will continue to tighten monetary policy.

Early Asian trading saw a decline in the dollar index, which gauges the performance of the dollar against a basket of major currencies, which dropped to 106.610, not far from its low of 106.27 set on Friday.

Investors will be watching the Monday face-to-face meeting between US President Joe Biden and Chinese leader Xi Jinping in addition to the usual flow of economic data and policymaker speeches.

In the meantime, oil prices increased after rising by 3.5% over the previous two sessions in anticipation of rising Chinese demand.