- Rupee falls on state-run banks’ dollar bids, USD/INR jumps.
- US-China headlines will remain in focus amid Thanksgiving light trading.
The Indian rupee fell for the first time in four days vs. the US dollar this Thursday, sparking a solid bounce in USD/INR back above the 71.50 level. At the press time, the spot tests offers near the last, up 0.34% on the day.
Despite fresh US-China trade jitters over the Hong Kong Democracy Act and the subsequent broad US dollar weakness, the USD/INR trades with size-able gains, mainly driven by the reduced demand for the Indian currency in the domestic market, as importers are seeking the buck for their month-end dollar payments.
According to a dealer with the Indian state-run bank, “Major chunk of the current dollar bids are from state-run banks, likely for their importer clients. Some foreign banks are also buying dollars amid a weak risk appetite globally.”
“But any inflows into the spot market will be delayed due to U.S. holiday. This factor is keeping trading volumes weak, and that can have a disproportionate impact on the pair today,” he added.
The pair also remains unperturbed by the weakness in oil prices, as the broader market sentiments and domestic dollar bids continue to have a significant impact. Meanwhile, Thanksgiving holiday-thinned trading could also exaggerate the USD/INR moves.
USD/INR Technical levels to consider
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