By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee was little changed in early trading on Tuesday, wedged between weak appetite for risky assets and dollar sales by a large state-run bank that helped support the currency, while dollar-rupee forward premiums rose.
The rupee was at 87.3050 against the U.S. dollar, nearly flat on the day.
Asian currencies were mostly weaker as concerns about a potential tariff-driven U.S. recession hurt risk appetite, weighing on regional equity indexes as well. The benchmark Indian equity index, Nifty 50 was down 0.2%.
Dollar bids spurred by the maturity of positions in the non-deliverable forwards (NDF) market weighed on the local unit as well, traders said.
The daily fix is quoting at 0.60/0.70 paisa premium but dollar sales from a large state-run bank seem to have blunted the upward bias for now, a trader at a mid-sized foreign bank said.
The Reserve Bank of India’s sell positions in NDFs are maturing and as they are not being rolled over, it pushes NDF points higher and “the pressure gets transmitted to onshore markets,” FX advisory firm IFA Global said in a note.
Meanwhile, dollar-rupee forward premiums rose, with the 1-year implied yield up 4 basis points at 2.20%, aided by a decline in U.S. bond yields as traders moved to price in about 85 bps of – or three or four – Federal Reserve rate cuts this year.
The 1-year U.S. Treasury yield has declined 9 bps this week and was last quoted at 3.97%, its lowest level since October last year.
Investors now await the release of U.S. and India’s consumer inflation data on Wednesday. India’s consumer inflation is expected to have eased to 3.98% and month-on-month U.S. core CPI likely dipped to 0.3% in February, per Reuters’ polls.
(Reporting by Jaspreet Kalra; Editing by Janane Venkatraman)
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