The rupee gained slightly against a steady dollar on the the last day of the year, quarter and month on hopes that oil companies, who have been continuously been buying dollars, would relent.
Bloomberg showed the rupee was at 82.7750 per dollar in early trade on the last interbank foreign exchange trading day of 2022, compared to its previous close of 82.8087 on Thursday.
"A tug-of-war between the bulls and bears is on in the USDINR amid low volatility and a lack of major cues due to year-end. The pair has strong support around 82.50 levels as we could see dollar demand from PSU banks on behalf of oil marketing companies. However, near 82.90 levels supply pressure exists, on the back of suspected RBI intervention and FII flows, which is keeping the USDINR in the narrow range," said Amit Pabari, Managing Director of CR Forex Advisors.
"Overall, the view remains the same. The pair is likely to top out near the 83.00 to 83.20 zone. Any rise in the spot market is a good opportunity to sell for exporters. In the near term, it is expected to fall back to 81.50-81.20 levels, where importers can look for hedging," he added.
The Federal Reserve's aggressive tightening of monetary policy and worries over the outlook for global economy have helped the dollar this year and the US currency was on track for its best yearly performance in seven years.
This year, the US dollar index, which measures the greenback against a basket of major peers, has rise over 8 per cent, the most since 2015.
To combat rising inflation, the Fed has increased rates by a total of 425 basis points since March, a move that has maintained the dollar strong for the most of the year.
The greenback has unwound from its massive rise, however, on predictions that the central bank may not need to hike rates as much as earlier anticipated. The dollar has fallen over 7 per cent this quarter.
"I expect the king dollar to lose its crown and the dollar to make a more decisive turn by the middle of next year," Moh Siong Sim, Currency Strategist at Bank of Singapore, told Reuters.
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