Rupee ends slightly higher even as most Asian currencies slip
Indian rupee closed marginally stronger on Tuesday despite weakness in most Asian currencies, with traders broadly expecting the rupee to see rangebound price action ahead of the outcome of India's national elections.
The rupee ended at 83.3050 against the U.S. dollar, slightly higher than its close at 83.3350 on Friday.
The rupee rose to an intra-day peak of 83.2650, its highest level in nearly a month, before dollar demand from local importers eroded some of the gains, traders said.
«Think we'll see it drift lower towards 83.50 again,» a foreign exchange trader at a foreign bank said, adding that weakness beyond that is unlikely given the likelihood of intervention by the Reserve Bank of India.
Traders expect the rupee to hover between 83.20 and 83.50 in the near term.
The dollar index was down 0.1% at 104.5, while most Asian currencies declined, with the Thai baht down 0.6% and leading losses.
Recent comments from Federal Reserve officials pressured Asian currencies as they dented hopes of rate cuts by the U.S. central bank this year.
Meanwhile, dollar-rupee forward premiums slipped with the 1-year implied yield down 1 basis point (bp) at 1.70%, pressured by an uptick in US bond yields.
While April's softer-than-expected U.S. consumer inflation print was «encouraging», it is «too early to tell whether the recent slowdown in the disinflationary process will be long lasting», Fed Vice Chair Philip Jefferson said on Monday.
Investors now await the release of minutes from the Federal Reserve's April 30-May 1
