GDP boost, flow cushion to strengthen rupee (IANS Currency Watch)

By Rohit Vaid Mumbai, Nov 29 : Better-than-expected Q2FY21 GDP figures along with consistent foreign fund inflows are expected to strengthen the rupee during the truncated trade week ahead.
However, the upcoming monetary policy review as well as build-up of India’s forex reserves are likely to arrest any sharp appreciation bias in the rupee.
Recent data showed that India’s Foreign exchange reserves rose $2.51 billion during the week ending November 20 to reach $575.29 billion.
“The RBI has been intervening in forwards and absorbing dollars without impacting liquidity and therefore augmenting reserves,” said Sajal Gupta, Head, Forex and Rates, Edelweiss Securities.
The RBI is known to enter the markets via intermediaries to either sell or buy US dollars to keep the rupee in a stable orbit.
“‘Operation Twist’ is helping to control long-term yields at lower rates. Short-term rates have touched a low of 2 per cent as well indicating ample liquidity which is also pushing up risk assets.”