Rally in Asian peers fails to lift rupee amid importers' dollar demand
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An improvement in risk sentiment, due to the decline in U.S. Treasury yields, failed to budge the Indian rupee on Friday, even as its Asian peers rallied.
The rupee was at 83.2475 against the U.S. dollar as of 10:25 a.m. IST, little changed from its close at 83.2425 in the previous session.
The rupee has been weighed down by persistent U.S. dollar demand from importers, a foreign exchange trader at a private bank said.
"Positive global cues take 5 minutes to reverse, so, it (the rupee) is just in a wait-and-watch mode."
The 10-year U.S. Treasury yield was lower at 4.65% during Asian trading hours, and the dollar index also retreated to 106.08. Asian currencies climbed, with the Korean won's over 1.5% jump leading gains.
"Importers have been hedging aggressively for the next two quarters," said Arnob Biswas, head of foreign exchange research at SMC Global Securities.
Despite shifting global cues and strong local dollar demand, the rupee remained in a narrow range throughout October, notching its quietest month since 2004.
The lull in volatility was aided by the Reserve Bank of India's routine interventions to defend the rupee, traders said. Nonetheless, the local unit fell to a record low of 83.2950 in the final minutes of trade on Wednesday.
A lack of market appetite for directional bets has also contributed to the rupee's tranquil run.
"Exporters are not receiving at low premiums, while importers not going long aggressively until 83.30 is taken out," a foreign exchange salesperson at a private bank said.
Rupee forward premiums have receded over the last month, with the 1-year implied yield currently at 1.61%, down by more than 20 basis points since early October.
Investors now await U.S. labour market data, due later in the day.
