By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee ended modestly stronger on Wednesday as strong dollar demand from state-run and foreign banks eroded positive cues due to broader weakness in the greenback, which helped lift most Asian currencies.
The rupee swung between gains and losses through Wednesday’s session before ending a tad higher at 85.27 against its close at 85.33 in the previous session.
The currency touched a peak of 85.07 in early trade before falling to a low of 85.51 due to persistent dollar bids from a large state-run bank and a clutch of foreign banks, a foreign exchange trader at a Mumbai-based bank said.
Modest outflows also weighed on the rupee towards the close of the session, the trader added.
The dollar index, meanwhile, was down 0.6% at 100.3 while most Asian currencies gained, with the Korean won up nearly 1.7% on the day. The offshore Chinese yuan, a closely tracked peer of the rupee, was little changed at 7.20.
Renewed focus on reserve accumulation by the Reserve Bank of India, slower GDP growth as the impact of tariffs filters through and geopolitical uncertainty “should all mean the currency pair (USD/INR) finds a floor around current levels and moves up from here,” ING said in a note.
ING holds ” mildly bullish,” bias on the USD/INR and expects it to rise to 88 over the next 12 months.
India’s benchmark equity indexes, the BSE Sensex and Nifty 50 ended in the green, 0.2% and 0.3%, respectively, while the yield on the benchmark 10-year bond dipped to 6.29%.
Remarks from Federal Reserve policymakers, due later in the day, are in focus for cues on the future path of policy rates after data showed that U.S. consumer prices rose less-than-expected in April.
(Reporting by Jaspreet Kalra; Editing by Sonia Cheema)
