MUMBAI: The Indian rupee was little changed on Friday, unmoved by the pullback in crude oil prices and US Treasury yields, while far forward premiums dropped to a 4-month low on inadequate dollar liquidity.
The rupee was at 83.2650 at 10:45 a.m. IST, compared with 83.2725 in the previous session.
The 10-year US bond yield was lower at 4.49% in Asia, while demand worries pushed Brent crude to below $80 a barrel.
The dollar index was steady at 105.51.
“The pressure has cooled off a bit… but the rupee is unlikely to react much,” said Gaurang Somaiya, a foreign exchange analyst at Motilal Oswal Financial Services.
The positive cues so far have been “absorbed quickly”, Somaiya added.
Meanwhile, rupee forward premiums fell across tenors with the 1-year implied yield falling to 1.53%, its lowest since early-July.
Near forwards were at the lowest in more than a decade. Dollar supply shortage, reflected in the depressed USD/INR overnight swap rate, has driven down near premiums and kept far premiums under pressure, a foreign exchange trader at a private bank said.
India rupee down in line with Asian peers, premiums retreat
State-owned banks have been constantly bidding for cash-dollars over the last few days, the trader added.
“The pain will only ease when the Reserve Bank of India supplies dollars.”
The overnight USD/INR swap rate fell to an intra-day low of 0.04 paisa before recovering to 0.13 paisa.
Investors now await remarks from US Federal Reserve Chair Jerome Powell who is slated to speak later on Thursday.
Powell had delivered remarks on Wednesday as well but did not comment on monetary policy or economic outlook.
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