By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee was a tad weaker on Monday, but managed to keep its head above the 82 level on dollar sales from custodial banks, traders said.
The rupee was at 81.9675 to the dollar by 10:46 a.m. IST compared with 81.9450 in Friday’s session. The domestic currency has been in a 81.9675 to 82.0375 range this session.
The rupee “was just about” holding above 82, thanks to foreign banks offering dollars, likely for their custodial clients, a trader said.
Short USD/INR positions will be hoping to see a more decisive move below 82 and “that is possible if the RBI (Reserve Bank of India) does not come in”, he said.
The RBI mopped up dollars when the USD/INR dipped below 82, according to traders. This has partly helped India’s forex reserves to climb past $600 billion.
The rupee and other emerging market currencies are eyeing the U.S. Federal Reserve’s policy decision, due Wednesday. With a rate hike fully priced-in, Fed Chair Jerome Powell’s comments and tone at the press conference are likely to be a key focus.
The Fed’s dot plot has indicated one more rate hike after Wednesday, but investors feel there are slim chances of that happening.
“The Fed will continue to signal the prospect of further hikes, but with the credit cycle turning, we doubt it will carry through,” ING Bank said in a note.
Most Asian currencies were down to begin the week, while the dollar index was hovering just above 101. Rupee forward premiums were slightly lower, with the one-year implied yield at about 1.66%.
(Reporting by Nimesh Vora; Editing by Sonia Cheema)
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