By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee reached a more-than-two-month-high on Tuesday, supported by dollar inflows and the Chinese yuan’s advance, which few traders said prompted the central bank to intervene.
The rupee was at 81.75 to the U.S.
dollar by 10:55 a.m. IST, up from 81.8150 in the previous session. It hit 81.6750 earlier, its highest since the first week of May.
Some traders said that the rupee’s dip from the session highs was likely on account of dollar buying by the Reserve Bank of India, while some were not too sure.
A spot trader at a private bank said he was “reasonably sure” that the RBI had intervened and another said that “it was more than likely.”
Others did not agree.
“To me, this is normal dollar demand from oil companies and other importers,” a dealer at a state-run bank said.
“The RBI does usually come in at these levels but that does not mean they are necessarily there.”
Besides the dollar inflows, the yuan’s gain also boosted the rupee.
The offshore yuan climbed to near 7.15 to the dollar and Chinese equities rallied after the country’s top leaders pledged to step up policy support to shore up a flagging economic recovery.
The dollar, meanwhile, dropped versus a basket of its major peers, awaiting the outcome of the Federal Reserve’s policy meeting on Wednesday.
While the Fed is widely expected to raise rates, the guidance on future moves will be key for the dollar.
(Reporting by Nimesh Vora; Editing by Savio D’Souza)
