Dollar edges higher as risk rally hits pause
Trading was thinned in Asia with Japan out on a holiday, and with investors still returning from an extended New Year break, currencies traded mostly sideways in early deals.
Trading was thinned in Asia with Japan out on a holiday, and with investors still returning from an extended New Year break, currencies traded mostly sideways in early deals.
Non-deliverable forwards (NDFs) indicate the rupee will open at around 83.02-83.04 to the U.S. dollar, compared with its previous closing at 83.00. The rupee on Friday had its best session in more than eight months, attributed to inflows, stop losses and most importantly the Reserve Bank of India's decision not to intervene.
The rupee was at 83.3025 as of 10:55 a.m. IST, little changed from its close of 83.33 in the previous session. The dollar index was slightly lower in Asia hours at 101.89 after dropping nearly 0.9% on Thursday.
Both the euro and Japanese yen jumped in response, with the European Central Bank (ECB) preparing to announce its policy decision later on Thursday and the Bank of Japan coming up next week.
Non-deliverable forwards indicate the rupee will open at around 83.34-83.36 to the U.S. dollar, compared with 83.3925 in the previous session. The rupee on Monday dropped to 83.40, not too far away from the lifetime low of 83.42, prompting the Reserve Bank of India (RBI) to sell dollars, according to traders.
The RBI likely sold U.S. dollars to cap further depreciation in the rupee, five traders said. The central bank is "not letting (USD/INR) move above 83.40," a foreign exchange trader at a foreign bank said.
Brent crude futures edged up 13 cents to USD 78.16 a barrel by 0106 GMT, while U.S. West Texas Intermediate crude futures were up 18 cents at USD 73.22 a barrel.
The rupee has, since February, meandered in a narrow range of 81.60 to 82.80. The Reserve Bank of India has actively intervened on either side, pushing rupee's volatility below historical levels.
The dollar edged up against major peers, as markets priced in around a 1-in-4 chance of the U.S. Federal Reserve raising benchmark rates this month after robust jobs data.
Non-deliverable forwards indicate rupee will open at around 82.80-82.84 to the dollar, compared to 82.66 in the previous session. On Friday, the Reserve Bank of India said it will withdraw its highest denomination 2,000-rupee note from circulation.
Non-deliverable forwards indicate the rupee will open at around 82.20-82.22 to the U.S. dollar, compared with 82.1625 in the previous session.