By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee ended little changed on Monday as dollar demand from importers, including local oil companies, eroded early gains from inflows.
The rupee ended at 83.1375 against the U.S. dollar, barely changed from its previous close at 83.15.
While the local unit had risen to a three-week high of 83.0550 earlier in the session, strong dip-buying appetite on the dollar-rupee pair eroded early gains, a foreign exchange trader at a state-run bank said.
“We keep seeing importers moving in to capture lower levels on spot (on USD/INR),” the trader said, adding that local oil companies were also seen bidding for dollars.
Most Asian currencies were rangebound, save for the Thai baht, which weakened by about 0.8%. The dollar index was little changed at 102.46.
While stronger than expected non-farm payrolls data had initially lifted the dollar on Friday, the greenback shed gains after data signalled considerable slowing in the services sector of the world’s largest economy.
The Institute for Supply Management said that its non-manufacturing PMI fell to 50.6 last month from 52.7 in November, marking its lowest reading since May.
The mixed data did little to alter expectations surrounding a potential rate cut in the world’s biggest economy.
Investors are currently pricing in a slightly above 68% chance of the Federal Reserve cutting interest rates in March, according to CME FedWatch tool.
While the overall bias remains positive for the rupee, the market is likely to “stay choppy,” heading into U.S. inflation data due later this week, said Arnob Biswas, head of foreign exchange research at SMC Global Securities.
Month-on-month core consumer price inflation (CPI) is forecast to come in at 0.2% in December, down from 0.3% in the previous month, according to a Reuters poll of economists.
(Reporting by Jaspreet Kalra; Editing by Varun H K)
