Rupee little changed as U.S. yields spike on Fed rate-hike jitters

A customer hands Indian currency notes to an attendant at a fuel station in Mumbai

By Anushka Trivedi

MUMBAI (Reuters) - The Indian rupee barely budged against the dollar on Wednesday, as U.S. yields jumped overnight on bets of multiple Federal Reserve rate hikes and weighed on sentiment.

The rupee was at 82.81 per dollar by 10:31 a.m. IST, against its previous close of 82.79.

Most Asian currencies declined, with the Chinese yuan at one point falling past 6.90 per dollar level, after U.S. data showed business activity sped to an eight-month high in February.

The data comes on the heels of robust jobs, inflation and retail sales print and has sparked a further revision of Fed terminal rate expectations.

U.S. 2-year Treasury yield rose to an over three-month peak overnight, while the 10-year yield hovered close to 4% after jumping 12 basis points. [US/]

"The implied rate on Fed funds from futures has risen to a peak of 5.365% for the August contract, suggesting that a peak upper bound of 5.5% is being increasingly priced in," ING analysts wrote in a note.

The rupee's losses were possibly contained by the Reserve Bank of India's presence in the offshore market before the onshore spot market opened, a trader at a Mumbai-based bank said.

The dollar index being rangebound also likely helped, the trader added.

The RBI has likely been selling dollars in the non-deliverable forward market to prevent the rupee from weakening past 83 to a dollar, Reuters reported last week.

Markets now await minutes of the central bank's latest monetary policy meeting due later in the day, as well as Fed minutes that will be released during U.S. trading hours.

(Reporting by Anushka Trivedi; editing by Eileen Soreng)