The rupee was at 83.26 to the dollar, up slightly from 83.2950 in the prior session
The Indian rupee gained in early trading on Monday, continuing its upside momentum from the earlier session, even though U.S. bond yields climbed as investors lowered bets on a rate cut by the Federal Reserve in June.
The rupee was at 83.26 to the dollar as of 4:15 am GMT, up slightly from 83.2950 in the prior session, when the rupee added almost 0.2%, recovering from Thursday’s record low of 83.4550.
Broad-based dollar sales from local and foreign banks helped the rupee on Monday, according to a foreign exchange trader at a state-run bank.
The currency should trade with a slight upward bias, the trader said.
A moderation in crude oil prices on easing tensions in the Middle East is also likely to assist the rupee, traders said. Brent crude oil futures were last quoted down 1.6% at $89.70 per barrel.
The dollar index was little changed at 104.3 while Asian currencies were mixed.
Treasury yields increased after data showed the U.S. economy created more jobs than expected in March, prompting a pullback in odds of an interest rate cut at the Federal Reserve’s June meeting.
The 10-year U.S. Treasury yield was higher in Asia at 4.41% after gaining 7 bps on Friday.
Chances of a June rate cut have dropped to below 50%, down from around 57% a week earlier, per the CME’s FedWatch tool.
Meanwhile, dollar-rupee forward premiums dropped, with the 1-year implied yield down 2 bps at 1.65%, pressured by the gain in U.S. bond yields.
The rupee is expected to stay in a 83.20-83.40 range on Monday, according to Anil Bhansali, head of treasury at Finrex Treasury Advisors.
