By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee rose on Thursday as traders cut short bets against the currency as it strengthened from a key technical level, although trading volumes were thinner due to a technical outage on the London Stock Exchange Group’s (LSEG) foreign exchange trading platform.
The rupee rose to 87.0550 as of 11:10 a.m. IST, up 0.2% on the day.
Financial technology and data provider LSEG’s foreign exchange trading platform is facing technical issues in India, which has dampened volumes, according to traders.
LSEG did not immediately respond to a Reuters email seeking comment.
“Usually it (USD/INR) moves higher when technical issues impact liquidity but failure to hold onto technical support near 87.20 has sparked a slight pullback,” a trader at a mid-sized private bank said.
Pointing to the weakness in the dollar, the trader said that the rupee may also be benefiting from participants closing out short bets against the currency.
Meanwhile, India’s retail inflation data on Wednesday showed that consumer prices eased below 4% for the time in six months in February, opening the door to further rate cuts by the central bank.
While pressure on the currency can often delay easing cycles in emerging markets, analysts do not expect that to hamper rate reductions in India currently.
A weaker currency can hamper inflows into Indian debt and can bring forth imported inflation but “on both these counts, the risks are manageable for India at this juncture,” DBS Bank said in a note.
The bank expects the Reserve Bank of India to cut rates by another 50 basis points this year and said it would not be surprised if the central bank changes its monetary policy stance to “accommodative” from “neutral” in April.
Asian currencies were trading mixed on Thursday, while the dollar index was nearly flat at 103.6.
(This copy has been corrected to add dropped words in paragraph 1)
(Reporting by Jaspreet Kalra; Editing by Sonia Cheema)
