Rupee Rises 7 Paise To 82.80 Per Dollar In Early Trade

The rupee gained a touch against the dollar on Monday on hopes of a recovery in Chinese demand even as global recession concerns linger.

According to Bloomberg, the rupee was last at 82.8038 per dollar in early trade, compared to its previous close of 82.8687 on Friday.

"As markets go into holiday mode, stability seems to be the keyword. Today's opening will be at around 82.65 as the RBI steps in to control the fall in the rupee, which has been mainly due to oil importers buying $," said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors.

"Exporters may sell any bids of $ towards 82.80/90 while importers may buy the dips to the lower end of the band to hedge their import liabilities for the near term," he added.

The mood isn't improving as we approach the year's end due to softening economic data.

Surveys released last week indicated that European, Japanese, and American business activity declined in December, maintaining demand for the safe-haven dollar.

China's business confidence has likewise fallen to its lowest level since the World Economics Survey started compiling data in January 2013.

The likelihood of future interest rate hikes, as signalled by major central banks, dampened festive cheer as Asian markets began the final full trading week of 2022 on a shaky note.

The Federal Reserve and European Central Bank (ECB) raised interest rates last week and announced more to come. There is growing speculation that the Bank of Japan (BOJ), which meets on Monday and Tuesday, is considering modifying its current ultra-dovish attitude.

According to a report on Saturday from the news agency Kyodo, Japan is planning to tweak its 2 per cent inflation target policy, potentially giving the central bank more leeway.

A revision to a joint statement between the Japanese government and the BOJ about the latter's inflation objective could lead to a change in the BOJ's ultra-loose monetary policy, which drove up the yen's value on Monday.

"Where there's smoke, eventually there is fire," Rodrigo Catril, a Strategist at National Australia Bank in Sydney, told Reuters.

"This sort of news we're getting plays to this view that the government will open the door for the BOJ to have a more flexible approach," he said, "and that some of this uber-undervaluation of the yen can be reversed."

The interest rate differential between rising US and stable Japanese rates has been the key factor in the yen's 15 per cent loss against the dollar this year, making it the worst-performing G10 currency.