By Jaspreet Kalra
MUMBAI – The Indian rupee was little changed on Tuesday, unable to gain from an uptick in most Asian peers, with traders anticipating rangebound moves until the outcome of India’s general election.
The rupee was at 83.1325 against the U.S. dollar as of 09:40 a.m. IST, barely changed from its close at 83.13 in the previous session. The currency hovered between 83.1075 and 83.1375 in early trading.
The dollar index dipped 0.1% to 104.4 while most Asian currencies rose, with the Korean won up 0.6%, leading gains.
Analysts expect the rupee to mostly trade sideways heading into the India’s election results, due on June 4.
“Expect rangebound behaviour going into results, possibly between 82.90 and 83.30,” Anindya Banerjee, head of foreign exchange research at Kotak Securities said.
Equity-related flows will also influence the rupee heading into the elections results. Overseas investors have net sold $2.7 billion worth of stocks in May so far, the highest outflow since January.
The rupee may gain slightly towards the end of the week, with the rejig of the MSCI Global Standard index expected to draw about $2 billion in passive inflows, according to an estimate by Nuvama Alternative & Quantitative Research.
The MSCI “passive flow will come later this week but positioning by active trading funds could spur some inflows earlier as well,” a trader at a foreign bank said.
Remarks from Federal Reserve speakers will be in focus later on Tuesday for cues on when the central bank may begin to ease policy rates.
Odds of the Fed keeping rates unchanged in September have risen to 50%, up from about 38% a week earlier, according to CME’s FedWatch tool.
(Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala)
