By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee trimmed its early gains to trade little changed on Friday as positive global cues were offset by dollar demand from local importers, including oil companies.
Meanwhile, dollar-rupee forward premiums nudged up, aided by a dip in U.S. bond yields.
The rupee was at 86.6325 as of 11:00 a.m. IST, up slightly from its close at 86.66 in the previous session. The currency rose to as much as 86.4850 in early trading.
The dollar index was at 106.4 after touching a two-month low on Thursday while most Asian currencies were higher between 0.1% and 0.2%.
The rupee is expected to gain towards 86.20 “in a slow and steady manner as long positions (on USD/INR) are cut,” said Anil Bhansali, head of treasury at Finrex Treasury Advisors.
The Reserve Bank of India would be satisfied with the fall in the rupee’s real effective exchange rate (REER) in January 2025 and may allow some more appreciation, he said.
Central bank data released on Wednesday showed the rupee’s 40-currency REER eased to 104.8 in January from 107.1 in December, signalling the overvaluation against currencies of India’s major trading partners narrowed.
While the rupee was gripped by a stern depreciation bias earlier in February, firm intervention by the central bank helped alleviate the pressure, which has reflected in a decline of the cost of hedging for a weaker rupee.
Dollar-rupee far forward premiums ticked up on Friday with the 1-year implied yield up 2 basis points to 2.14% on the back of a decline in near-tenor U.S. Treasury yields.
Investors await the release of the minutes of RBI’s February policy meeting, where the central bank announced its first rate cut in nearly five years. The minutes are due after market close.
(Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibility for its content.
