Indian rupee steady as dollar weakens

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MUMBAI, Nov 20 (Reuters) – The Indian rupee was essentially flat on Monday as importers’ continued demand for the greenback offset a weaker dollar.

The rupee was trading at 83.2675 rupees against the dollar as of 10:40 a.m. Indian Standard Time, compared with 83.27 rupees at the close of the previous session.

Asian currencies rose on Monday, with the offshore yuan and the Indonesian rupee both up more than 0.5 percent. The dollar index, which measures the greenback’s strength against a basket of six major currencies, slipped to 103.6, its lowest level since early September.

Indian rupee steady as dollar weakens

The dollar has continued to weaken in recent weeks as market participants lowered their expectations for further interest rate hikes by the Federal Reserve due to weaker-than-expected economic data.

While the rupee may benefit from a weaker dollar, traders expect the local currency to continue to fluctuate within a narrow range. The rupee has been trapped in a range of 82.70-83.40 since early September.

A weaker dollar, lower oil prices and equity market-related inflows have given the rupee a ‘chance to appreciate’,” said a forex trader at a state-run bank. However, the rupee is unlikely to appreciate significantly unless local demand weakens, the trader added.

About $900 million worth of initial public offerings (IPOs) are expected to hit the Indian markets this week and the MSCI index changes that come into effect on November 30 could also attract $1.5 billion in inflows.

Anand James, Chief Market Strategist, Geojit Financial Services, said, “We continue to be frustrated in the range of 83-83.30. If 83.3 continues to be resistance, expect a slide to 83.19.

Investors are waiting for the minutes of the Federal Reserve’s October meeting to be released on Tuesday, which could provide clues to the central bank’s future interest rate policy.

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