The rupee closed at 83.0550 against the U.S. dollar, unchanged from its close in the previous session.
The rupee hovered between 83.03 and 83.0650 during the session.
While the rupee may face marginal pressure from the jump in U.S. bond yields, debt-related inflows can help cap weakness in the local unit, a foreign exchange trader at a private bank said.
Overseas investors have bought $936 million worth of Indian bonds so far in February, in addition to the $275 million worth of inflows into local equities, according to the latest stock repository data.
The dollar was little changed near 104.5, hovering close to its highest level in nearly three months. The 10-year U.S. Treasury yield was last quoted slightly lower at 4.15% after rising 13 basis points (bps) on Monday in the light of data that showed the services sector growth in the U.S. picked up more than expected in January. “There is little U.S. data on the calendar today and we would expect (the dollar index) to hold recent gains,” ING Bank stated in a note.
Most Asian currencies rose, with the offshore Chinese yuan up 0.2% following signs that authorities are strengthening their resolve to support slumping markets in the world’s second-largest economy.
While some “chunky inflows” had aided the rupee’s gains in recent sessions, the local unit is unlikely to stray much from its broad 82.80-83.30 range in the near term, said Sajal Gupta, head of forex and commodities at Nuvama Professional Clients Group’s institutional desk.
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