The Indian rupee slid between gains and losses in choppy trading on Tuesday as USD/INR overnight swap rates declined, fueled by outflows of dollars in cash, traders said.
The rupiah fell as low as 81.4425 to the dollar, adding to its decline from the previous session. The local unit had climbed to a seven-week high of 80.5200 on Monday.
Meanwhile, the USD/INR overnight swap rate fell to 0.46/0.48 paisa. Importers and exporters access the cash swap market to exchange the dollars traded in the spot market.
A trader at a private bank said outflows of dollars in cash via a major foreign bank explained the rise in the spot price and the decline in overnight rates over the past two days.
For a dollar cash outflow, an importer will use the USD/INR buy/sell swap to take delivery of the dollars he bought in the spot market on the same day.
The buy/sell swap, thanks to the outflow of dollars, pushed the implied overnight rates of the rupee lower than the domestic call rates.
At a swap rate of 0.46 paisa, the implied overnight rupiah rate is slightly above 5%. The weighted average TREPS rate is 5.70%.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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