MUMBAI, Aug 23 (Reuters) – The Indian rupee rose in early trade on Friday, boosted by gains in most of its Asian peers ahead of closely watched remarks from Federal Reserve Chair Jerome Powell later in the day.
The rupee was at 83.8850 against the U.S. dollar as of 10:10 a.m. IST, higher than its close of 83.9525 in the previous session.
Asian currencies were mostly higher on the day, with the offshore Chinese yuan up 0.1% at 7.13, while the Thai baht rose 0.4% to lead gains. The dollar index was down slightly at 101.3.
With “dollar on the weaker side,” the rupee should be closer to 83.75, but the absence of strong inflows alongside persistent dollar demand from importers has kept it in narrow range, a foreign exchange trader at a state-run bank said.
Local oil companies were bidding for dollars on Friday as well, keeping a lid on the currency’s upside, the trader added.
Overseas investors have pulled out about $2.1 billion from domestic stocks in August so far, in contrast to nearly $7 billion in net inflows in June and July.
The rupee is likely to trade with a positive bias on the day but expect gains to be limited near 83.80, said Dilip Parmar, a foreign exchange research analyst at HDFC Securities.
Comments from Fed Chair Powell will be in focus later in the day as investors gauge the extent and timing of U.S. rate cuts.
Interest rate futures have fully priced a 25 basis-point September rate cut, while the odds of 50 bp cut are at 26%, according to CME’s FedWatch tool.
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Reporting by Jaspreet Kalra; Editing by Sonia Cheema
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