By Jaspreet Kalra
MUMBAI (Reuters) -The Indian rupee was little changed on Wednesday, wedged between persistent importer dollar bids and the positive cue from an uptick in wagers on a rate cut by the U.S. Federal Reserve next month, that also boosted dollar-rupee forward premiums.
The rupee was at 88.60 against the U.S. dollar as of 11:30 a.m. IST, down marginally from its close at 88.5675 in the previous session
Weakness in U.S. private payrolls data for October released on Tuesday prompted traders to add to wagers that the Fed will deliver a 25 basis point rate cut next month, driving down near-tenor U.S. Treasury yields.
The interest-rate-expectations-sensitive 2-year U.S. Treasury yield <US2YT=RR> eased 3 basis points to 3.56% in Asia trading on Wednesday.
While this helped push up the 1-year dollar-rupee forward premium to 2.18%, its impact on the rupee’s spot rate was relatively muted in the face of persistent importer dollar demand which has made upticks in the currency over recent sessions largely fleeting.
Traders are also on the lookout for signs of positive momentum in U.S.-India trade talks after an Indian trade official said on Tuesday that New Delhi is awaiting Washington’s response for an agreement.
The remark follows U.S. President Donald Trump’s comments that the U.S. is getting close to a trade deal with India.
“The positive tone in his (Trump’s) remarks offered a sense of relief and improved confidence, especially when paired with weaker U.S. economic data that pushed the dollar lower,” said Amit Pabari, managing director at FX advisory firm CR Forex.
The dollar index was last at 99.5 after retreating 0.1% in the previous session while Asian currencies were flat to slightly lower. The focus today is also on a U.S. legislature vote to end the government shutdown, which would resume the release of key economic data.
(Reporting by Jaspreet Kalra; Editing by Ronojoy Mazumdar)
