By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee was up slightly versus the U.S. dollar on Wednesday despite weak Asian cues, while near-forward premiums dropped tracking the fall in the cash overnight swap rate.
The rupee was quoting at 82.0750 to the dollar by 10:52 a.m.
IST, up from 82.1175 on Tuesday. The Chinese yuan and the Thai baht were down 0.2% and the Korean won fell about 1%.
Indian equities, like the rupee, fared better than the rest of Asia. The BSE Sensex hit a record high despite losses on other Asian gauges.
“It was difficult to pinpoint the reason for the rupee holding up, but persistent foreign portfolio inflows are definitely helping,” a trader at a public sector bank said.
Foreigners have invested about $1.8 billion into Indian equities this month, having poured in $5.1 billion in May.
The dollar index was slightly higher in Asia ahead of U.S.
Federal Reserve Chair Jerome Powell’s testimony to lawmakers. The Fed, last week, kept rates on hold, but the projections put out by policymakers indicated two more rate hikes this year.
Investors will be particularly interested in insights into the future trajectory of interest rates after the recent pause, said Amit Pabari, managing director at Mumbai-based CR Forex.
The USD/INR had established robust support at 81.80-90 and with premiums lower, importers are likely to hedge their near-term payments, Pabri added.
USD/INR near premiums fell amid the cash overnight swap continuing to remain low.
The USD/INR cash/swap rate was at nearly 0.16 paisa, indicating a rupee-implied interest rate of 5.75%.
The 1-month USD/INR was down to 7.5/8, according to a trader.
(Reporting by Nimesh Vora; Editing by Janane Venkatraman)
