MUMBAI: The Indian rupee was little changed on Wednesday as local demand for U.S. dollars from importers and persistent equity outflows offset positive global cues.
The rupee was at 83.2375 against the U.S. dollar as of 11:15 a.m. IST, after closing at 83.2450 in the previous session.
The dollar index was little changed at 105.8, but has retreated from the recent high above 107 hit last week. The 10-year U.S. treasury yield was also lower following dovish commentary from U.S. Federal Reserve officials.
Asian currencies strengthened, with the Korean won leading gains, up over 0.8%.
Indian rupee in narrow range, US yields and oil risks in focus
Persistent equity outflows and steady dollar demand from importers are sustaining the pressure on rupee, a foreign exchange trader at a state-run bank said. “The buy on dips bias is also continuing.”
Foreign investors have sold $836 million of equities so far in October. They snapped a six-month buying streak in September, selling equities worth $1.77 billion, according to NSDL data.
Brent crude oil futures were largely steady even as markets remain wary of potential spillovers from the ongoing conflict in the Middle East.
“Traders are not in a hurry to create positions, given the overall uncertainty,” said Dilip Parmar, a foreign exchange research analyst at HDFC Securities.
While the bias for the rupee is slightly on the positive side, the market will wait for stronger cues that could trigger a directional move, Parmar added.
Investors now await consumer inflation data from the United States and India due on Thursday.
India’s consumer price inflation is expected to moderate to 5.5% year-on-year, while the month-on-month core U.S. consumer inflation is likely to stay unchanged at 0.3%, according to Reuters polls.
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