Rupee trades higher against US dollar
NEW DELHI: The rupee appreciated by 2 paise to 66.47 against the US dollar in early trade on Wednesday in line with other Asian currencies.
On Tuesday, the rupee strengthened by 18 paise to close at 66.49 against the US currency due to persistent selling of dollar by banks and exporters after RBI kept its key policy rates unchanged.
Most Asian currencies were trading higher against the greenback on Wednesday morning. The Malaysian ringgit and Taiwanese dollar added 0.39 per cent each, Korean won rose 0.31 per cent, Indonesian rupiah gained 0.15per cent, while Thai baht rose 0.14 per cent. Japanese yen and Chinese yuan were trading flat.
Data released overnight showed the US manufacturing sector contracted last month to its weakest level since June 2009, while construction spend rose in October to the highest level since December 2007. This has raised hopes that the US Fed may raise interest rates gradually.
Nonetheless, the dollar remained firm against developed market currencies.
The dollar index, which tracks the movement of dollar against a basket of six major global currencies, rose 0.11 per cent to 99.90.
“There may be some negative implications (of rise in dollar index) for emerging markets, but I think it would be for a very brief period. We doubt that hiking cycle is going to last very long, because we actually think that many of the US indicators are already showing signs of peaking. This includes growth in US jobs. The US economic cycle is likely to be weaker next year,” said David Mann, Standard Chartered.
The US Fed will review its money policy on December 15-16.
“While it may be negative in the short term and you could see a bit more dollar strength over the coming 6 to 12 months. we may be seeing a topping out in some of the dollar crosses against emerging markets due to Fed policy than what necessarily we are seeing from each individual market,” Mann said.
Read full article: Economic Times
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