By Jaspreet Kalra
MUMBAI – The Indian rupee was nearly flat on Monday, even though most of its Asian peers declined tracking weakness in the Chinese yuan and amid heightened odds of a second presidential term for Donald Trump.
The rupee was at 83.5425 against the U.S. dollar as of 10:10 a.m. IST, barely changed from its close at 83.5350 in the previous session. The currency shuffled between 83.54 and 83.5475 in early trade.
The rupee is expected to be in a narrow range on Monday amid risk aversion in broader markets while the Reserve Bank of India continues to protect against sharp weakness in the currency, Anil Bhansali, head of treasury at Finrex Treasury Advisors said.
Most Asian currencies weakened with the Korean won down 0.5% and leading losses. The Chinese yuan weakened 0.1% following weaker-than-expected second-quarter GDP data. The dollar index was little changed at 104.2.
Expectations of Trump reclaiming the top job in the world’s largest economy rose following an assassination attempt on him on Saturday.
Even before the attack, investors had positioned for a second Trump term by pushing up the dollar and longer tenor U.S. bond yields. Such trades may see heightened interest following the shooting.
However, the rupee might not see much of a spillover from immediate political developments in the U.S., traders said.
Importers and state-run banks have been “consistently buying (dollars) below 83.50 while the upside (on USD/INR) remains well-capped near 83.60-65,” a trader at a foreign bank said.
Meanwhile, India’s foreign exchange reserves rose $5.2 billion to a record high $657.16 billion as of July 5, data from the central bank showed on Friday.
Investors await remarks from Fed Chair Jerome Powell later in the day for cues on the future path of U.S. policy rates.
(Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala)
