MUMBAI, April 22 (Reuters) – The Indian rupee logged
modest gains in early trading on Monday on dollar sales from
foreign banks but traders expect the upside to be capped as U.S.
bond yields continue to hover at elevated levels.
The rupee was at 83.4325 against the U.S. dollar as
of 10:00 a.m. IST, up slightly from its close at 83.47 in the
previous session.
The currency slipped to a record low of 83.5750 on Friday
but recovered on the back of heavy intervention from the Reserve
Bank of India (RBI), traders said.
“Large offers” to sell dollars from foreign banks, likely on
behalf of custodial clients, helped the rupee on Monday, a
foreign exchange trader at a state-run bank said.
Most Asian currencies were muted, somewhat comforted by
ebbing fears of a wider conflict in the Middle East.
The dollar index held above 106 while the 10-year U.S.
Treasury yield rose 5 basis points (bps) to 4.66%.
Fears of a escalation in the conflict between Iran and
Israel faded after the former said on Friday that it had no plan
to retaliate following an apparent Israeli drone attack within
its borders.
Brent crude oil futures were last quoted down about 0.7% at
$86.62 per barrel.
The rupee is likely to be in a “consolidation phase” on
Monday, Dilip Parmar, a foreign exchange research analyst at
HDFC Securities said. The near-term resistance for the rupee is
pegged at 83.20, Parmar added.
Meanwhile, dollar-rupee forward premiums eased, with the
1-year implied yield down 2 basis points at
1.66%, pressured by a rise in near-maturity U.S. bond yields.
The focus this week will be on personal consumption
expenditure inflation, due on Friday, for further cues on when
the Federal Reserve may begin to cut policy rates.
(Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala)
