The Indian rupee was barely changed on Friday as corporate dollar demand knocked it off the day’s highs. At 10:34 a.m. IST, the rupee was trading at 82.0625 vs the dollar, down from 82.0725 the previous session. Early transactions saw the currency achieve a near two-week high of 81.94, putting it on track for its strongest week in almost four months.
“Interestingly, the rupee has disregarded the trend of the dollar index and remains relatively stable,” said a trader with a private bank. That has largely to do with expectations that the Reserve Bank Of India will cap the rupee’s upside above 81.80, importer hedging and speculators staying at bay, the trader said. Unless the rupee appreciates above 81.80 convincingly, “we can expect a rangebound market,” he added.
Asian stocks and currencies climbed, while the dollar index fell below 100 for the first time in 15 months, as views of the Federal Reserve stopping interest rate hikes increased. Producer price data from the United States bolstered views that the Federal Reserve is nearing the end of its rate-hiking cycle. The Fed’s 25 basis point (bps) raise on July 25-26 has been fully factored in by investors. Beyond that, the Federal Reserve of the United States is widely expected to halt.
On Thursday, the S&P 500 Index reached a 15-month high, while US rates continued to fall in response to the Fed’s predicted rate hike. The two-year US yield is presently 50 basis points lower than last week’s high, while the 10-year yield is over 32 basis points lower than year-to-date highs set on July 7. Amid a slide in U.S. yields, dollar-rupee far forward premiums continued to inch higher. The one-year implied yield rose to an over two-week high of 1.76% intraday on Friday.
Source:FE