The rupee closed at 83.9675 against the U.S. dollar, almost unchanged from its close at 83.9625 in the previous session. The currency hovered in a 2 paisa band during the session
Two large U.S. headquartered banks dominated dollar bids while “at current levels, state-run banks are constantly on offer (on USD/INR),” most likely on the RBI’s behalf, a senior trader at a foreign bank said.
Outflows from local equities have kept the currency on the backfoot with foreign investors pulling out about $7 billion from stocks over the last eight trading sessions.
The U.S. dollar and bond yields have been boosted by investors pricing a less aggressive monetary easing cycle from the Federal Reserve. The 10-year U.S. Treasury yield rose to a peak of 4.08% on Thursday, its highest since July 30.
Dollar-rupee forward premiums have declined as a result of bets on shallower Fed rate cuts alongside the RBI changing its policy stance to “neutral,” on Wednesday. The 1-year implied yield is down 19 bps over October so far and last quoted at 2.20%, its lowest in a month. Asian currencies were mostly lower by 0.1% to 0.4% while the dollar index was at 102.9, hovering close to its highest level in about two months.
The dollar index “could make a bid for the 103.35 area should the US core CPI (consumer price index) surprise on the upside today. Geopolitical uncertainty should also help the dollar,” ING Bank said in a note