Rupee holds steady amid subdued Asian markets, forward premiums expected to fall

Rupee in focus: The rupee remained relatively unchanged on Tuesday, mirroring subdued movements in other Asian currencies. 

Investors are eagerly anticipating the release of key US economic data this week, which will provide insights into the potential trajectory of Federal Reserve rate adjustments.

As of 10:05 am, the rupee stood at 82.88, showing marginal fluctuations compared to its previous close of 82.89.

Despite expectations for the rupee to gradually appreciate, it is anticipated to encounter resistance around the 82.80 level in the near term, according to a foreign exchange trader at a private bank.

While the rupee has enjoyed support from robust inflows, domestic dollar demand coupled with potential intervention by the Reserve Bank of India (RBI) has tempered its gains in recent trading sessions.

The dollar index remained steady at 103.72, while most Asian currencies traded within a narrow range.

Looking ahead, the rupee is forecasted to trade within a tight band of 82.80 to 83.10 in the short term, with the possibility of further appreciation if it breaches the 82.80 threshold, noted Amit Pabari, managing director at FX advisory firm CR Forex.

Meanwhile, dollar-rupee forward premiums maintained stability for the day, but market sentiment suggests a downward bias in premiums, particularly with attention on the RBI's $5 billion sell-buy swap maturing on March 11.

The one-year implied yield saw a marginal decline of 1 basis point to 1.71 per cent, marking its lowest level since mid-December.

Traders anticipate a potential decline in forward premiums if the RBI opts to receive the dollars upon maturity, despite their current stagnation.

Investors are now eagerly awaiting the release of US durable goods orders and consumer confidence data later in the day, which could offer further direction to currency markets.

(With Reuters Inputs)