The rupee weakens slightly against a strong dollar ahead of key US inflation dataThe rupee weakened on Thursday as the Reserve Bank of India stepped in to limit further losses in the domestic currency against a strong dollar on risk aversion driven by fears that geopolitical tensions and aggressive rate hikes would push the global economy into a recession.Financial markets trod water as traders await direction from US inflation data scheduled to be released later Thursday.The rupee was last changing hands at 82.3925 per dollar, after opening at 82.2800, compared to its previous close of 82.3112, according to Bloomberg.PTI reported that the rupee fell 6 paise to close provisionally at 82.39 against the US dollar. The domestic currency’s trading range of 82.2563 to 82.4175 suggests that it has held its ground against a strong dollar, extending a steading pattern seen this week on the RBI’s intervention.”The rupee has been relatively stable during the day today as RBI kept selling $ today also at 82.40 levels as the market awaited for the US CPI data,” said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors.”The communication of RBI to banks for not taking any position did not seem to have the desired effect as buying and hedging by importers continued with demand for dollar unabated,” he added.A Reuters report quoting bankers and traders showed that the RBI asked local banks to refrain from taking any further rupee positions in the offshore market in its fight to stem the rupee’s dramatic fall this year.That is the most recent action taken by the Indian central bank apart from selling dollars through state-run banks in the spot and futures markets by burning about $100 billion of its foreign exchange reserves since Russia invaded Ukraine in late February.The soaring cost of food and fuel drove India’s retail inflation to 7.41 per cent last month, the highest level since April, further straining already tight household budgets.
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Strange India 