BENGALURU: The Indian rupee reversed course to close slightly stronger on Monday as buying interest emerged from importers after the local unit touched its highest levels since early May on the back of likely dollar inflows earlier in the session.
The rupee ended at 81.9575 per dollar, compared to its close of 82.0375 in the previous session. The domestic currency rose to a high of 81.76 earlier, its strongest since May 8.
There was some bargain hunting from importers as the dollar fell below 81.80 rupee levels, said Dilip Parmar, research analyst at HDFC Securities.
Indian rupee to struggle on more Fed rate hike bets; US yields surge
Though the bias is for the rupee to strengthen further, the pair could consolidate between 82.30 and 81.60 levels, Parmar added.
There was strong dollar-buying interest around 81.80 levels, traders said, though there was also some speculation that the Reserve Bank of India may have stepped in to buy the greenback.
The Indian rupee had risen 0.77% in June, its highest since a 1.19% appreciation in January, mostly helped by inflows into equities.
“We see continued inflows into Indian financial markets and dollar selling pressure from market forces to sustain,” Almus Risk Consulting said in a note.
One-year dollar forward premiums fell to 1.66% on Monday, levels last seen in December 2022, tracking higher U.S. yields.
Against a basket of currencies, the dollar rose 0.2% to 103.17, with investor focus this week staying on the minutes of the U.S. Federal Reserve’s June meeting due on Wednesday.
The Fed had hinted that borrowing costs may still need to rise by as much as half a percentage point by the end of the year.
Markets are pricing in a 90% chance of the Fed hiking rates by 25 basis points in its July meeting, the CME FedWatch tool showed.
Comments
Comments are closed for this article.