Rupee inches up, continues to lack clear direction; awaits RBI
By Nimesh Vora
MUMBAI (Reuters) - The Indian rupee was trading marginally higher on Tuesday after a pullback in the U.S. dollar, while traders awaited the Reserve Bank of India's policy decision.
The rupee quoted at 82.6125 to the U.S. dollar by 11:08 a.m. IST, up from 82.67 in the previous session.
The USD/INR pair is unable to build momentum on either side. After having dropped from near 82.80 to 82.30, the pair managed to recover on Monday.
"USD/INR lacks a clear direction and exhibits minimal discernible patterns," said Anindya Banerjee, head of research for foreign exchange and interest rates at Kotak Securities.
There was an absence of distinct support and resistance zones and that means the pair can reverse its course from any point from its current narrow range of 82-83, Banerjee added.
The RBI rate decision could "lend some volatility," but "there was no way" it will change the current status quo on USD/INR, a spot trader at a private bank said.
The RBI decision is due on Thursday when it is expected to leave the repo rate unchanged at 6.50% after having surprised markets by holding rates in April.
The dollar was left struggling against its major peers following data that indicated that the Federal Reserve rate hike cycle was impacting service activity.
The Institute for Supply Management (ISM) said that its non-manufacturing PMI fell by 1.6 to 50.3 last month. Economists polled by Reuters had expected the PMI to inch up.
That is the survey’s lowest reading since the onset of the pandemic, except for December last year which was affected by severe weather conditions, ANZ said in a note.
U.S. yields fell with the 2-year dropping below 4.50%. Tracking the fall in U.S. yields, rupee forward premiums rose.
(Reporting by Nimesh Vora; Editing by Dhanya Ann Thoppil)
