MUMBAI, May 10 (Reuters) – The Indian rupee was little changed on Friday as dollar demand from local oil companies and tepid sentiment surrounding Indian equities amid worries over the country’s election results offset positive cues from a dip in U.S. bond yields.
The rupee was at 83.4850 against the U.S. dollar as of 10:10 a.m. IST, barely changed from its previous close at 83.5025.
“General dollar buying pressure has been there for the last few days but don’t think the rupee will see significant moves as the RBI should be there below 83.50,” a foreign exchange trader at a foreign bank said.
Traders expect the central bank’s interventions will keep sharp declines in the rupee at bay.
“The equity market is nervous” about the general election results, due on June 4, which is likely to maintain some pressure on the local currency, the trader added.
Concerns over the results have prompted foreign investors to pull out about $2 billion from Indian equities in May so far.
Benchmark Indian equity indices, the BSE Sensex and Nifty 50, were in the green on Friday after falling 1.4% and 1.5%, respectively, in the previous session.
“There could be modest knee-jerk weakness in INR FX and risk assets if BJP (India’s ruling party) loses some seats and maintains a majority,” MUFG Bank said in a Friday note.
“Conversely, a greater seat share win … will be perceived much more positively by markets, with INR FX and risk assets likely rallying in the aftermath.”
U.S. bond yields also dipped as odds of a September rate cut by the Federal Reserve inched up to 67%, up from 62% a week before, according to the CME’s FedWatch tool.
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Reporting by Jaspreet Kalra; Editing by Sohini Goswami
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