Rupee, forward premiums rise tracking drop in U.S. yields

A man counts Indian currency notes inside a shop in Mumbai

By Nimesh Vora

MUMBAI (Reuters) - The Indian rupee rose against the dollar on Friday and forward premiums moved up in the wake of a fall in U.S. yields triggered by data showing a jump in jobless claims.

The rupee was at 82.46 to the U.S. dollar by 10:27 a.m. IST, up from 82.5625 in the previous session. The USD/INR May forward premium rose 1.4250 rupees from 1.40 and the one-year implied was up 4 basis points at 1.80%.

U.S. yields rose overnight, the dollar dropped against its major peers and U.S. equities advanced after data showed that the number of Americans filing new claims for unemployment benefits spiked to the highest level in more than 1-1/2 years.

Markets hope the U.S. labour market is cooling down and that in turn will impact the Fed stance, said Srinivas Puni, managing director at QuantArt Market Solutions.

"All hinges now on the coming inflation print, which if remains sticky, can quash dovish expectations quickly."

The increase in jobless claims strengthens the case for the U.S. Federal Reserve to not hike rates when it meets next week. Before the quiet period ahead of the June 13-14 meeting, two Fed officials had indicated that they prefer a pause at this month's meeting.

The Fed at next week's meeting will have on hand the May U.S. inflation print, due for release on June 13. Economists polled by Reuters expect a 0.3% month-on-month increase in headline CPI and a 0.4% rise in core CPI.

(Reporting by Nimesh Vora; editing by Eileen Soreng)