Rupee flat amid month-end dollar bids and likely RBI intervention

The Indian rupee was little changed on Thursday, as likely intervention by the Reserve Bank of India supported the currency amid pressure from dollar bids by importers and foreign banks.

The rupee was at 84.4625 against the US dollar at 11:20 a.m. IST, compared to its previous close of 84.4525.

State-run banks were spotted selling dollars in early trading, most likely on behalf of the RBI, traders said.

The central bank has frequently intervened in recent sessions to support the rupee near the psychologically important support level of 84.50. The rupee had weakened to a record low of 84.5075 last week.

 

Dollar bids from foreign banks and importers weighed on the rupee, a trader at a private bank said. Other Asian currencies were mixed, while the dollar index trimmed losses after falling 0.7 per cent on Wednesday.

"Profit-taking sent the USD and US bond yields lower," ahead of the US Thanksgiving holiday on Thursday, DBS Bank said in a note.

"We remain vigilant against more volatility, mindful that Trump is also unpredictable," the bank said, referring to the US President-elect's recent comments about imposing tariffs on China, Canada and Mexico.

Meanwhile, dollar-rupee far forward premiums rose, aided by the decline US bond yields. The 1-year implied yield rose to 2.23 per cent, its highest level in three weeks.

Far forward premiums have "formed a range for now and the 1-year is likely to stay between 2.10 per cent-2.40 per cent unless there is a material shift in rate cut expectations," a trader at a state-run bank said.

The RBI is widely expected to keep rates unchanged at its policy meeting next week, while investors are pricing in a near-70 per cent chance of a US rate cut in December.    (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)