MUMBAI: The Indian rupee recovered from its opening lows on Friday but was range-bound as lingering concerns of a US banking crisis took some shine off a respite from the Federal Reserve likely pausing rate hikes soon.
The rupee was trading around 82.2350 per US dollar by 10:45 a.m IST after opening at 82.30. It closed at 82.2625 in the previous session.
Traders said they would sell dollars, expecting the rupee to move towards 82-levels in the coming days after the Federal Reserve hinted it was close to ending its rate hiking cycle, along with seasonal factors in March helping the local unit.
“We are nearing the last week of the financial year and around this time there tends to be heavier than usual exporter selling,” said Anindya Banerjee, head of research - FX and interest rates at Kotak Securities.
As long as USD/INR is not sustaining above 82.45, one can attempt fresh shorts, Banerjee added. Most Asian currencies fell on Friday, with the Chinese yuan down to 6.84 per dollar and the South Korean won 0.3% weaker.
The dollar index eked out marginal gains overnight after declining for five sessions.
Central banks in Switzerland, Norway and Britain all raised interest rates, while more US data indicated the labour market remained tight, showing no impact yet of the failure of two regional banks that had roiled financial markets.
Asian equities declined and Indian shares flitted between marginal gains and losses.
Indian rupee seen little changed tracking Asian markets; CS fallout eyed
Meanwhile, US bond yields added to Thursday’s fall on dovish Fed expectations.
The benchmark 10-year note yield fell 2 basis points (bps) to 3.3855% and two-year yield was little changed after dropping 18 bps overnight to 3.80%. Futures show a near-61% probability of a pause at the Fed’s May meeting and about 90 bps worth of rate cuts this year.
Markets now await US manufacturing and services PMI flash estimate for March.
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