MUMBAI, Dec 9 (Reuters) – The Indian rupee firmed slightly on Tuesday, supported by dollar sales from foreign banks and increased exporter inclination to book hedges, while traders expressed a preference for small-sized bets on the currency’s direction.
The rupee was at 89.9775 at 10:45 a.m. IST, a touch stronger from its close of 90.07 in the previous session.
Asian currencies and the dollar index were steady, while global equity markets were on a nervous footing heading into a closely-watched U.S. Federal Reserve policy decision on Wednesday.
India’s benchmark equity indexes, the BSE Sensex and Nifty 50 were each down about 0.5%, tracking a similar drop in MSCI’s gauge of Asian shares outside of Japan.
While the rupee slipped in early trading, dollar sales from foreign banks helped shore up the currency, a trader at a state-run bank said.
The two-way moves in the rupee over recent sessions have also encouraged interbank traders to stick to small position sizes, the trader added.
Traders “need to keep tight stop-losses on long (USD/INR) positions as pullbacks have been quick,” another trader at a Mumbai-based bank said.
Meanwhile, U.S. Treasury Secretary Scott Bessent said that Washington is still working on a trade deal with New Delhi, which, analysts reckon, remains a focal point for the rupee.
Elsewhere, though a 25-basis-point Fed rate cut is already priced in, the central bank’s Summary of Economic Projections (SEP) will offer investors cues on the future path of benchmark interest rates.
“We expect the Fed to cut 25bp this week and another 50bp next year, with a 25bp cut in each of Q1 and Q2,” analysts at ANZ said in a note. The interest-rate-expectations-sensitive 2-year U.S. Treasury yield was last at 3.58%, little changed on the day.
(Reporting by Jaspreet Kalra; Editing by Sonia Cheema and Harikrishnan Nair)
