THE RUPEE: modest recovery

Steadier trend was seen on the local money market as the rupee managed to recover some ground against the dollar on the money market during the week, ended on August 3, 2019. The rupee rose over Re one versus the dollar for buying and selling at Rs 159.10 and Rs 159.15.
INTER-BANK MARKET RATES: OPEN MARKET RATES: The rupee gained sharply in terms of the dollar for buying and selling at Rs 158.20 and Rs 159.20. The rupee also appreciated sharply against the euro for buying and selling at Rs 174.50 and Rs 176.50.
Commenting on the rupee's firmness, some leading money experts said that despite the rupee's firmness in terms of the US currency, the commercial centres are lack of normal trading activity mainly because of imposition of general sales tax (GST) on several products. Besides, as a whole, Trump's threat of more tariffs is going to be a continued negative factor for the global economy.
They observed that most of the buyers were shy of making new deals as they have financial problem particularly after new taxes in budget announcement, and partly because of Trump's comments, in which he said he would impose an additional 10% tariff on $300 billion worth of Chinese imports starting September 1, as talks aimed to ease tensions between the world's two largest economies continue.
Explaining the consistency in the local currency's value, marketmen said that in the absence of major payment, some corrective measures by the government and better position of the country's foreign exchange reserves boosted the rupee's value in terms of the green back.
INTER-BANK MARKET RATES: On Monday, the rupee moved with little variations versus the dollar for buying and selling at Rs 160.55 and Rs 160.56. On Tuesday, the rupee picked up 50 paisas versus the dollar for buying and selling at Rs 160.05 and Rs 160.10.
On Wednesday, the rupee moved slightly versus the dollar for buying and selling at Rs 160.00 and Rs 160.05. On Thursday, the rupee gained about 50 paisas versus the dollar for buying and selling at Rs 159.38 and Rs 159.42.
INTER-BANK MARKET RATES: On July 28, the rupee rose by nearly 28 paisas versus the dollar for buying and selling at Rs 159.10 and Rs 159.15. On July 29, the rupee was almost unchanged in relation to the dollar for buying and selling at Rs 160.00 and Rs 160.50, dealers said. The rupee did not show any change in terms of the euro for buying and selling at Rs 177.70 and Rs 179.50, they said.
On July 30, the rupee also recovered sharply in relation to the dollar for buying and selling at Rs 159.00 and Rs 160.00, dealers said. The rupee appreciated modestly in terms of the euro for buying and selling at Rs 177.00 and Rs 178.75, they said. On July 31, the rupee was almost unchanged in relation to the dollar for buying and selling at Rs 159.00 and Rs 160.00. The rupee moved up marginally in terms of the euro for buying and selling at Rs 176.60 and Rs 178.60.
On August 1st, the rupee followed same pattern in relation to the dollar for buying and selling at Rs 158.60 and Rs 159.60. The rupee also appreciated in terms of the euro for buying and selling at Rs 175.00 and Rs 177.00.
On August 2nd, the rupee gained further 20 paisas in relation to the dollar for buying and selling at Rs 158.40 and Rs 159.40, dealers said. The rupee, however, shed modestly in terms of the euro for buying and selling at Rs 175.40 and Rs 177.40.
On August 3, the rupee managed to extend gains in terms of the dollar, picking up further 20 paisas for buying and selling at Rs 158.20 and Rs 159.20. The rupee also appreciated sharply against the euro for buying and selling at Rs 174.50 and Rs 176.50.
OVERSEAS OUTLOOK FOR DOLLAR: In the first Asian trade, the dollar clung to a two-month high against a basket of currencies in Asia on Monday after better-than-expected US GDP data last week enhanced its yield attraction against rival currencies.
The US Federal Reserve is widely expected to cut interest rates for the first time in more than a decade this week, but such a move is widely seen as a pre-emptive one to protect the economy from global uncertainties and trade pressures, in contrast to some other countries that face more imminent risks.
US gross domestic product increased at a 2.1% annualised rate in the second quarter, above forecast of 1.8%, as a surge in consumer spending blunted some of the drag from declining exports and a smaller inventory build.
The dollar was available against the Indian rupee at Rs 68.940, the greenback was at 4.120 in terms of the Malaysian ringgit and the US dollar was trading at 6.893 versus the Chinese yuan.
In the second Asian trade, the yen was little changed versus the dollar on Tuesday, trading near a three-week low after the Bank of Japan left monetary policy on hold as expected, and as investors pared expectations for aggressive rate cuts from the US Federal Reserve.
The BOJ left its massive asset purchase programme and forward guidance unchanged at a monetary policy meeting on Tuesday. Governor Haruhiko Kuroda may provide further clues on policy at a press conference from 0630 GMT.
Against a basket of six major currencies, the dollar traded near a two-month high.
The Fed is expected to cut rates by 25 basis points on Wednesday, and investors are watching for clues on whether the move may be a one-off or the first in a series of several cuts, as many traders are anticipating.
The pound hit a new 28-month low early in Asia trade as investors grew increasingly nervous about the prospects of a no-deal Brexit under new British Prime Minister Boris Johnson.
The dollar was trading against the Indian rupee at Rs 68.760 and the greenback was at 6.888 versus the Chinese yuan.
In the third Asian trade, the dollar held firm on Wednesday, as a wait-and-see mood prevailed, with traders looking ahead to the outcome of the Federal Reserve's meeting later in the day when policymakers are expected to cut interest rates for the first time since 2008.
With the Fed expected to reduce its key rate by 25 basis points (bps), the main focus is on whether it will leave the door open for further policy easing to insulate the world's largest economy from slowing global growth and the fallout from trade conflicts.
The dollar index against a basket of six major currencies stood little changed at 98.055 after pulling back from a two-month high of 98.206 touched on Tuesday.
The dollar was trading against the Indian rupee at Rs 68.870, the greenback was at 4.125 versus the Malaysian ringgit and the US currency was available at 6.881 in relation to the Chinese yuan.
In the fourth Asian trade, the dollar rose to a two-year peak against the euro and jumped to a two-month high versus the yen on Thursday as US Federal Reserve Chairman Jerome Powell ruled out a lengthy easing cycle after delivering the first rate cut since the financial crisis.
The euro fell to fell to $1.1034, the lowest since May 16, 2017, before paring losses to trade down 0.2% at $1.1045.
Against the yen the dollar broke through an important resistance level at 109.00 yen to reach a two-month high of 109.35 yen. The dollar index against a basket of six major currencies rose 0.3% to a two-year high of 98.932.
The dollar was trading against the Indian rupee at Rs 69.055, the greenback was at 4.143 versus the Malaysian ringgit and the US currency was at 6.900 in terms of the Chinese yuan.
In the final Asian trade, the Japanese yen surged to a five-week high versus the dollar and a 2-1/2-year peak against the pound on Friday, after US President Donald Trump broke a truce in the Sino-US trade war, bolstering demand for safe-havens.
China's onshore yuan slumped to its lowest since November 2018 as Trump's new levies would end a recent pause in a trade war that has forced Chinese policymakers to unleash stimulus to offset its slowing economy.
The dollar index was steady in Asia at 98.417 after falling 0.15% on Thursday, its biggest daily decline in two weeks.
The dollar was trading against the Indian rupee at Rs 69.280, the US currency was available at 4.152 in terms of the Malaysian ringgit and the greenback was at 6.936 versus the Chinese yuan.
In the final US trade, the dollar fell broadly on Friday as news of slower US employment growth in July and heightened US-China trade tensions fuelled expectations that the Federal Reserve would cut interest rates again in September.
Non-farm payrolls increased by 164,000 jobs in July, fewer than the month prior, and wages increased modestly, the Labour Department said. The report came a day after US President Donald Trump announced an additional 10% tariff on $300 billion worth of Chinese imports starting September 1, leading financial markets to almost fully price in a September rate cut.
The dollar fell 0.76% against the Japanese yen to its lowest since January 3, last at 106.50. Versus the euro it was 0.22% weaker at $1.1109. The Swiss franc, which like the yen serves as a safe-haven investment in times of market volatility, was 0.83% stronger to 0.9818 franc per dollar.