MUMBAI, July 4 (Reuters) – The Indian rupee could not mirror the gains in its Asian peers on Thursday due to dollar demand related to the Indian central bank’s intervention to support the rupee one month back during the country’s unexpected election outcome.
The rupee was at 83.5275 against the U.S. dollar as of 10:10 a.m. IST, barely changed form its close at 83.53 in the previous session.
Its intervention in the one-month non-deliverable forwards matures on Thursday, which is likely fuelling the elevated demand for dollars, traders said.
The dollar index fell 0.3% on Wednesday and Treasury yields dipped after data signalled the U.S. economy is cooling, boosting hopes of rate cuts by the Federal Reserve.
While most Asian currencies rose by 0.1% to 0.2%, the rupee was unable to gain due to heightened demand for dollars.
The dollar/rupee fix was last dealt at a premium to the daily reference rate that the Reserve Bank of India (RBI) releases in the afternoon. The premium signals elevated demand for dollars.
The rupee could face some pressure but “since the RBI is aware, they may try to manage and limit weakness”, a senior FX trader at a foreign bank said.
The U.S. economy on a cooling path would allow the Fed to embark on calibrated easing of two cuts this year, DBS Bank said in a note.
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Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala
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