Rupee dips to near one-month low, pressured by dollar bids from foreign banks
The rupee declined to 86.2725 per dollar by 11 a.m. IST, down 0.1% on the day. The currency hit its weakest level since June 23 at 86.35 in early trading.
Most Asian currencies were trading lower, while the dollar index was little changed, with investors keeping an eye on trade negotiations ahead of an August 1 deadline to strike deals with Washington.
"If the discussions fail or get delayed, Indian exporters could face fresh pressure, adding to the rupee's challenges. However, if a deal is reached, it could offer a much-needed breather," said Amit Pabari, managing director at FX advisory firm CR Forex.
Meanwhile, a narrow arbitrage between non-deliverable and onshore rates helped nudge dollar-rupee forward premiums higher, with the one-month forward premium ticking up to 12.25 paisa, its highest level in three weeks.
The one-year dollar-rupee implied yield was also a tad higher at 1.99%.
The arbitrage isn't "too large," a swap trader at a state-run bank said. The trader said the dollar-rupee daily fix was last quoted at a 0.20/0.30 paisa premium, signalling heightened demand for dollars at the reference rate.
On the day, India's benchmark equity indexes, the BSE Sensex (.BSESN), opens new tab and Nifty 50 (.NSEI), opens new tab, were trading higher, while the yield on the benchmark 10-year bond was little changed.
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