By Anushka Trivedi
MUMBAI (Reuters) – The Indian rupee ended marginally higher on Monday, giving up most of the day’s gains as the Chinese yuan fell and the dollar index rebounded slightly.
The rupee finished at 81.91 per dollar, compared to its previous close of 81.9650. The currency climbed up to 81.6350 during the session, its highest level since Jan. 31.
Towards the end of the session, the local currency reversed its direction as the dollar index recouped losses and offshore Chinese yuan fell 0.6%, while traders cited dollar buying by state-run banks.
The yuan came under pressure after the country set a softer-than-expected economic growth target for 2023.
Importers were advised to add hedges when USD/INR dipped near 81.60-levels, said Ritesh Bhansali, vice president at Mecklai Financial Services.
“Risk events like the Federal Reserve Chair Jerome Powell’s two-day testimony to lawmakers mid-week and the U.S. jobs report on Friday could see the rupee rally be impacted,” he added.
Considering that the Fed peak rate is being revised repeatedly, these gains in the rupee “are welcome” but may not sustain for long as all emerging market currencies will have to navigate a tough macro environment, ANZ India’s head of trading Nitin Agarwal said.
Bhansali was of a similar view and reckoned domestic traders would buy dollars at current levels and possibly sell above 82.50.
On Friday, the rupee had managed to break the narrow 82.40-83.00 range to firm past 82-levels on the back of one-off dollar inflows, which traders attributed to a pick-up in equity markets and stop losses being triggered, among other factors.
Indian stocks have risen more than 2% over two sessions.
(Reporting by Anushka Trivedi; Editing by Janane Venkatraman)
