Rupee faces opposition at 82/USD; premiums at highest since Oct

Indians rupee It rose against the US dollar on Wednesday amid weakness in the greenback, but was unable to clear a key level, while lower US yields pushed insurance premiums to their highest levels since October.

The rupee was at 82.1850 to the dollar by 11 am IST, up from 82.3325 in the previous session. The rupee reached an intraday high of 82.0525.

“Based on how the past few days have gone, it’s not unexpected to see this (recovery from 82,050). Importers’ orders are likely to be filled,” said a foreign exchange sales officer at a private bank. “You just have to keep playing the 82 to 82.50 range for now.”

Asian currencies rose on the back of US data which may make the Federal Reserve less willing to raise interest rates at its next meeting. Employment opportunities in the United States fell to their lowest level in two years, data released on Tuesday showed, after weak manufacturing data.

“The tight US labor market is getting looser, and the Fed rate hike cycle is increasingly seen as coming to an end,” Zhang Weiliang, a macroeconomic analyst at DBS, said in a note. The dollar index fell to its lowest level in two months. US yields fell with the two-year yield falling to 3.85 per cent.

Tracking the decline in US yields, the US dollar rose against the Indian rupee to the highest level since October. The one-year implied yield rose 10 basis points to 2.54 per cent.

Focus now turns to RBI policy decision on Thursday and US jobs data on Friday. The Reserve Bank of India is expected to raise interest rates by 25 basis points, and economists expect that the US economy added fewer jobs last month than in February.

The rupee (INR) has remained flat over the past week. It closed at 82.3313 against the dollar on Monday.

The Ministry of Foreign Affairs said on Saturday India and Malaysia could now use the Indian rupee to settle trade In addition to other currencies.