By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee was little changed on Monday as sustained dollar demand from importers kept the local unit sticky even as the dollar index slumped to its lowest level in over 2 months.
The rupee was at 83.2675 against the U.S. dollar as of 10:40 a.m. IST. It closed at 83.27 in the previous session.
Asian currencies rallied, led by the offshore Chinese yuan and the Indonesian rupiah, both up by over 0.5%. The dollar index fell to 103.6, its lowest level since early September.
The dollar has weakened as market participants price out the risk of further tightening from the U.S. Federal Reserve following weaker-than-expected economic data released last week.
While the rupee may benefit marginally from the weaker dollar, traders broadly expect the local currency to continue holding in narrow range. The rupee has remained in a 82.70-83.40 range since early September.
Weaker dollar, lower oil prices and equity-related inflows give the rupee “a chance to appreciate,” a foreign exchange trader at a state-run bank said. But unless local demand abates, the rupee won’t gain much, the trader added.
Initial public offerings (IPO) worth about $900 million are expected to hit Indian markets this week. MSCI index changes effective November 30 are also likely to draw $1.5 billion in inflows.
“We continue to be in the frustrating range of 83-83.30. If 83.3 continue to resist, expect slippage to 83.19,” Anand James, chief market strategist at Geojit Financial Services said.
Investors now await the minutes of the the Fed’s October meeting, due on Tuesday, which could provide cues on the central bank’s future rates trajectory.
(Reporting by Jaspreet Kalra; Editing by Nivedita Bhattacharjee)
