Rupee sidesteps dip in Asia FX, supported by state-run banks' dollar sales
By Jaspreet Kalra
MUMBAI, Oct 8 (Reuters) -The Indian rupee was little changed on Tuesday, as dollar sales from state-run banks supported the currency even as most of its Asian peers declined amid the rise in U.S. bond yields and oil prices.
The rupee INR=IN was at 83.9475 against the U.S. dollar as of 11:00 a.m. IST, a tad stronger from its close at 83.9775 in the previous session.
State-run banks sold dollars "heavily" in early trading, most likely on behalf of the Reserve Bank of India (RBI), to support the currency, three traders said.
The rupee has hovered close to the 84 handle for the last four trading sessions but has not fallen below it largely on account of interventions by the central bank.
On the day, the rupee was also cushioned by diminished appetite to short sell the currency after the RBI on Monday informally instructed banks to avoid large bets against it, traders said.
Most Asian currencies were lower by 0.1% to 0.3%, while the dollar index was steady at 102.4.
U.S. bond yields rose on Monday, with the 10-year Treasury yield climbing to a two-month peak of 4.03%, as bets of aggressive rate cuts by the Federal Reserve have diminished after upbeat jobs data.
Interest rate futures are now pricing in 50 basis points of Fed rate cuts over the remainder of 2024, down from around 72 basis points last week. FEDWATCH
Brent crude oil prices climbed to an over one-month peak of $81.16 per barrel on fears that the Middle East could be on the brink of a region-wide war. Brent oil prices have risen 11% over October so far.
"There were some signs that Asian central banks are turning more concerned about FX volatility," MUFG Bank said in a note, pointing to market interventions by the Indonesian and Indian central banks.
Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala
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