By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee logged slight gains on Thursday, aided by a fall in U.S. Treasury yields which pulled back slightly after surging higher in light of hotter than expected U.S. inflation data.
The rupee was at 83 against the U.S. dollar as of 10:20 a.m. IST, against its close at 83.03 in the previous session.
The dollar index slipped from its 3-month peak on Wednesday and was last quoted at 104.7. Most Asian currencies ticked higher.
Dollar demand from local oil companies contributed to capping the rupee’s gains in early trading, a foreign exchange trader at a state-run bank said.
The rupee is likely to hover between 82.90 to 83.10 during the day’s session, the trader added.
The 10-year U.S. Treasury yield was slightly lower in Asia at 4.23% after falling 5 basis points (bps) on Wednesday in light of remarks from a Federal Reserve official about the timing of possible interest rate cuts.
“Even if inflation comes in a bit higher for a few months… it would still be consistent with our path back to target,” Chicago Fed President Austan Goolsbee said on Wednesday.
“I don’t support waiting until inflation on a 12-month basis has already achieved 2% to begin to cut rates,” Goolsbee added.
Meanwhile, rupee forward premiums inched up with the 1-year implied yield up 2 bps at 1.77%, after falling to its lowest in 6 weeks in the previous session.
“Momentum suggests the (dollar-rupee) pair will likely consolidate within the narrow range of 82.80 to 83.10, with any upward movement above 83 seen as a selling opportunity,” Amit Pabari, managing director at FX advisory firm CR Forex, said.
Investors now await the release of U.S. retail sales and initial jobless claims data due later in the day.
(Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala)
