The Indian rupee was largely unchanged on Tuesday, tracking the rangebound movement in its Asian peers and largely steady US bond yields as traders await fresh cues from economic data due later in the week.
The South Asian currency was at 83.3275 against the US dollar (22.705 against UAE dirham) around 9am, UAE time, slightly higher than its close of 83.3625 (22.714) in the previous session.
Most Asian currencies were steady and the dollar index also hovered little changed at 106.1.
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Traders expect the rupee to remain in the 83.25-83.40 range, with the bias tilted towards a slight appreciation. The currency had logged gains on Monday, aided by dollar inflows.
Foreign banks were seen offering dollars in early trading on Tuesday, helping the Indian rupee, a foreign exchange trader at a private bank said.
But the gains are likely to be limited by dollar demand from importers and mild dollar outflows after Vodafone Idea’s (VODA.NS), opens new tab follow-on public offering was oversubscribed by 6.36 times the shares on offer, stock exchange data showed on Monday.
However, foreign investors have been net sellers of Indian equities and debt so far in April, having pulled out $1.04 billion, according to stock depository data.
“The rupee’s downside risk is expected to be limited … with a gradual increase anticipated in the short term,” said Amit Pabari, managing director at FX advisory firm CR Forex.
Meanwhile, Brent crude oil futures were up slightly at $87.39 per barrel, after dipping on Monday on ebbing fears of escalation in the Iran-Israel conflict. US Treasury yields were little changed on Monday ahead of key economic data.
Amid easing tensions over the conflict in the Middle East, the focus will remain on the outlook for when the Federal Reserve may begin to ease policy rates.
In that regard, US GDP data on Thursday and personal consumption expenditure inflation data due on Friday are the key data points to watch.
(Inputs from Reuters)