Published 17:03 IST, February 27th 2024

Rupee steadies amid dollar demand and inflows

Dollar index dipped slightly to 103.7, while most Asian currencies remained steady ahead of release of key economic data.

Reported by: Business Desk
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Rupee steadies amid dollar demand and inflows | Image: Unsplash
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Rupee remains unchanged: The rupee remained largely unchanged on Tuesday, trading in a narrow range as demand for dollars from domestic oil companies offset the impact of sustained inflows.

The rupee closed at 82.8975 against the US dollar, almost unchanged from its previous close of 82.89. It fluctuated between 82.88 and 82.9025 during the session.

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The dollar index dipped slightly to 103.7, while most Asian currencies remained steady ahead of the release of key economic data, which could provide insights into the timing of potential interest rate adjustments by the Federal Reserve.

Later in the day, the US is set to release data on durable goods orders and consumer confidence, influencing market sentiment.

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Investors are currently pricing in a 17 per cent probability of a rate cut at the Fed's May policy meeting, down from around 34.5 per cent a week earlier, according to the CME's FedWatch tool.

Despite two major foreign banks offering dollars, consistent demand from domestic oil companies limited the currency's movement, according to a foreign exchange trader at a private bank.

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Forward premiums for the dollar-rupee pair declined, with the one-year implied yield dropping by 4 basis points to 1.68 per cent, the lowest level in over two months.

An overall increase in receiving interest from banks led to lower forward premiums. The maturity of the Reserve Bank of India's $5 billion sell-buy swap also contributed to this trend, traders noted.

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Anindya Banerjee, head of foreign exchange research at Kotak Securities, anticipates the rupee to trade between 82.80 and 83.10 in the short term, with the economic data likely to have a minimal impact on the currency.

(with Reuters inputs)

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17:03 IST, February 27th 2024