MUMBAI: The Indian rupee rose slightly on Monday on dollar inflows, although month-end demand for the greenback from importers, including local oil companies, was likely to limit gains, traders said.
The rupee was at 82.9025 against the U.S. dollar as of 10:20 a.m. IST, up 0.04% from its close at 82.9375 in the previous session.
The dollar index was near 104 while most Asian currencies weakened, with the Indonesian rupiah down 0.2% and leading losses.
Continuous inflows in the bond market should aid the rupee but do not expect it to rise substantially amid month-end demand from importers, a foreign exchange trader at a state-run bank said.
Oil companies were seen bidding for dollars during early trading on Monday, the trader added.
Meanwhile, dollar-rupee forward premiums recovered slightly, with the one-year implied yield up 2 bps at 1.74% after falling to its lowest level since December on Friday.
Indian rupee upward momentum runs into Fed, dollar buying by oil companies
While the bias “favours rupee bulls,” local dollar demand should keep the rupee rangebound between 82.75 and 83.10 in the near term, Dilip Parmar, a foreign exchange research analyst at HDFC Securities said.
Investor focus will be on a string of remarks from U.S. central bank officials scheduled to speak this week and the core personal consumption expenditures (PCE) price index – the Federal Reserve’s preferred measure of inflation.
“At some point, I think it will be appropriate to pull back on restrictive monetary policy, likely later this year,” New York Fed President John Williams said in an interview with Axios published on Friday.
Investors are currently pricing in a 20% chance of a Fed rate cut in May, down from nearly 90% a month earlier, according to CME’s FedWatch tool.
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