A man counts Indian currency notes inside a shop in Mumbai, India, August 13, 2018. REUTERS/Francis Mascarenhas/File Photo Acquire Licensing RightsMU
A man counts Indian currency notes inside a shop in Mumbai, India, August 13, 2018. REUTERS/Francis Mascarenhas/File Photo Acquire Licensing Rights
MUMBAI, Sept 11 (Reuters) – The Indian rupee rose on Monday, tracking a yuan rally after China’s forex regulator remarked that it would resolutely fend off risks of the currency overshooting.
The rupee was at 82.8675 by 11:15 a.m. IST against the U.S. dollar, compared to the close of 82.9450 in the previous session.
The offshore Chinese yuan reached a high of 7.2932 to the dollar, a rally of about 1%.
China’s foreign exchange self-regulatory body said on Monday it would resolutely fend off risks of the yuan overshooting and pledged to take action when needed to correct one-sided and pro-cyclical activities.
This prompted the yuan, which earlier received a boost from strength in the yen following hawkish comments by the Bank of Japan governor, to rise higher.
Some traders reckoned that more downside from here on USD/INR was unlikely.
Dollar demand from local oil companies will keep the USD/INR bid, a foreign exchange trader at a public sector bank said. Importers are likely to be quite active around the 82.80-82.85 level, the trader added.
The dollar index weakened to 104.58 during Asia hours while the 10-year U.S. Treasury yield was a touch higher at 4.29%.
“The rupee is likely to hold a range between 82.70 to 82.97 through the day,” said Dilip Parmar, a foreign exchange research analyst at HDFC Securities. Dips in USD/INR are an opportunity for importers to raise their hedges, Parmar said.
Investors will keenly eye inflation readings due in India and the U.S. this week. While India’s consumer inflation numbers are due on Tuesday, the U.S. will report the data on Wednesday.
Reporting by Jaspreet Kalra; Editing by Janane Venkatraman
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