Indian Rupee Holds Steady, Following Rangebound Asian Peers

Mumbai: The Indian rupee maintained its stability on Tuesday, mirroring the steady movement of its Asian counterparts and the largely unchanged U.S. bond yields. Traders are eagerly awaiting fresh signals from upcoming economic data releases later this week.

As of 10:10 a.m. IST, the rupee stood at 83.3275 against the U.S. dollar, marginally higher compared to its previous session close of 83.3625.

Across Asia, most currencies held steady, while the dollar index showed minimal movement at 106.1.

Market sentiment suggests that the rupee is likely to continue within the range of 83.25 to 83.40, with a slight inclination towards appreciation. Monday witnessed gains for the currency, supported by inflows in dollars.

Early trading on Tuesday saw foreign banks offering dollars, providing a lift to the rupee, according to a foreign exchange trader at a private bank.

However, potential gains may face constraints due to dollar demand from importers, compounded by mild dollar outflows following the oversubscription of Vodafone Idea’s follow-on public offering by 6.36 times the shares on offer, as per stock exchange data from Monday.

Despite these dynamics, foreign investors have remained net sellers of Indian equities and debt throughout April, withdrawing $1.04 billion, according to stock depository data.

Amit Pabari, managing director at FX advisory firm CR Forex, anticipates limited downside risk for the rupee, projecting a gradual strengthening in the short term.

Meanwhile, Brent crude oil futures saw a slight uptick at $87.39 per barrel, after a dip on Monday attributed to receding concerns regarding the Iran-Israel conflict escalation. U.S. Treasury yields showed little movement on Monday, ahead of significant economic data releases.

The spotlight remains on the Federal Reserve’s stance on policy rate adjustments, especially against the backdrop of easing tensions in the Middle East. Key data points to watch include U.S. GDP data scheduled for Thursday and personal consumption expenditure inflation data due on Friday.