Rupee little changed after initial losses; U.S. yields, RBI eyed
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The Indian rupee recouped from its initial decline versus the U.S. dollar and was little changed on Friday, as traders assessed the outlook for the local unit after the previous day's choppy session.
The rupee was trading at 82.7650 to the dollar at 0456 GMT, barely changed from 82.7600 in the previous session. The local unit had opened marginally lower at 82.90, pressured by U.S. Treasury yields.
On Thursday, the rupee had dropped to a record low, but managed to recover on likely intervention by the Reserve Bank of India.
After Thursday's volatile session, it "was understandable" if dollar bulls were showing "a bit of hesitancy", a currency trader at a private bank said.
The next big move could be on "either side", considering how "jumpy" the market will be, the trader said, adding the RBI had managed to arrest, at least temporarily, the rupee's downside momentum.
The rupee's Asian peers had slipped on Friday, weighed by a further uptick in U.S. Treasury yields.
The unexpected decline in U.S. initial jobless claims and further hawkish comments from Federal Reserve officials had lifted Treasury yields to new multi-year highs.
This reinforced bets that the Federal Reserve would keep opting for large rate increases. Futures had almost fully priced in another 75 basis points rate hike at the Fed's November meeting.
Drawing support from the U.S. Treasury yields and the underlying trend, rupee forward premiums dropped. The 1-year implied yield plunged to 2.35%, the lowest since 2011.
