MUMBAI: The Indian rupee nudged higher on Tuesday, after hitting an all-time low in the previous session, tracking gains in most Asian peers but importers’ dollar demand would check gains, traders said.
The rupee was at 83.95 against the US dollar as of 10:00 a.m., up slightly from its close at 83.9725 in the previous session, its weakest level on record.
Outflows from local equities alongside dollar demand from local corporates have hurt the rupee after the unwinding of carry trades last week.
Overseas investors net sold more than $500 million of local stocks on Monday, provisional exchange data showed.
The rupee has slipped nearly 0.3% over August so far, adding to its losses from the previous month. However, regular interventions by the Reserve Bank of India have ensured the currency does not see a steep fall, traders said.
Indian rupee ends moderately higher
“With the rupee struggling to gain ground despite the US$ pullback, authorities have been active dollar sellers to prevent USD/INR’s break above 84.00 to a new rupee low,” DBS Bank said in a note.
Asian currencies were mostly higher by 0.1% to 0.4% and the dollar index was up slightly at 103.1.
Dollar-rupee forward premiums nudged higher, with the 1-year implied yield up 1 basis point at 2.03%.
Far forward premiums have been supported by odds the Federal Reserve will begin to ease policy rates from September.
Investors currently expect the Fed to ease policy rates by a little over 100 basis points this year.
US wholesale inflation data due later in the day is in focus and precedes a closely-watched consumer inflation print on Wednesday.
American Dollar Exchange Rate