The rupee was at 83.4325 against the U.S. dollar, up marginally from its close at 83.47 in the earlier session
The Indian rupee logged modest gains in early trading on Monday on dollar sales from foreign banks but traders expect the upside to be capped as U.S. bond yields continue to stay at higher levels.
The rupee was at 83.4325 against the U.S. dollar as of 4:30 am GMT, up marginally from its close at 83.47 in the earlier session.
The currency slid to a record low of 83.5750 on Friday but recovered on the back of heavy intervention from the Reserve Bank of India (RBI), traders said.
“Large offers” to sell dollars from foreign banks, likely on behalf of custodial clients, helped the rupee on Monday, according to a foreign exchange trader at a state-run bank.
Most Asian currencies were muted, somewhat comforted by ebbing concerns of a wider conflict in the Middle East.
The dollar index held above 106 while the 10-year U.S. Treasury yield gained 5 bps to 4.66%.
Fears of an escalation in the conflict between Iran and Israel faded after the former said on Friday that it had no plan to retaliate following an apparent Israeli drone attack within its borders.
Brent crude oil futures were last quoted down around 0.7% at $86.62 per barrel.
The rupee is likely to be in a “consolidation phase” on Monday, according to Dilip Parmar, a foreign exchange research analyst at HDFC Securities. The near-term resistance for the rupee is pegged at 83.20, he added.
In the meantime, dollar-rupee forward premiums eased, with the 1-year implied yield down 2 basis points at 1.66%, pressured by an increase in near-maturity U.S. bond yields.
