Rupee steadied by depleting reserves
11 August 2004
RBI, depleting its dollar reserves down to $2.8 billion, has been stabilising the rupee in these times of heavy pressure on our currency. But for the RBI support the rupee would have slid significantly.
The surging oil prices, high inflation, dwindling hopes of foreign funds and poor economic reforms is weighing on the rupee and increasing the downward trend sentiment. The continued demand for the dollar by the corporates is also corroding the dollar reserves.
The US Federal reserve raised its interest rates yesterday and has kindled speculation for further rate hikes. US retail sales data is expected tomorrow. The traders are looking out for this, though expectations are low. A lower than expected data release will imply a further dampening of hopes of foreign funds inflow.
The Federal Reserve's 25bp interest rate hike and bullish outlook for stronger growth going forward has helped the dollar recoup some of its non-farm payrolls induced losses. A slowdown in the labour market and moderation in output growth in the US was acknowledged.
oil rose to a record $44.99 a barrel after Iraq cut
shipments to tankers at its Persian Gulf terminals because
of warnings of possible attacks on the petroleum industry
infrastructure. The oil prices and retails sales hold
the key to the price movements.
The dollar found some upside momentum on Monday to finish higher against the majors. This comes on the heels of large losses on Friday related to the weak July employment figure. The greenback gained against both the euro and yen.