MUMBAI, June 30 (Reuters) – The Indian rupee was little changed on Monday, with traders focusing on a key resistance level the currency would need to strengthen above to maintain its upward bias, while a broadly weaker dollar boosted other regional peers.
The rupee was at 85.52 per U.S. dollar, as of 12:20 p.m. IST, nearly unchanged from its close at 85.4750 on Friday.
Asian currencies were mostly higher with the Chinese yuan up 0.1% and hovering close to its strongest level since November last year, boosted by the Chinese central bank’s move to raise the daily reference rate to its strongest level in almost eight months.
The dollar index was last quoted a tad lower at 97.1, near its weakest level in over three years, as market optimism over U.S. trade deals bolstered bets for earlier Federal Reserve interest rate cuts.
Bolstered wagers on Fed rate cuts also helped boost dollar-rupee forward premiums with the 1-year implied yield up 2 basis points at 1.99%.
The rupee’s gains on Monday were, however, capped by broad based interbank dollar bids even as traders expect the Indian currency to trade with a slightly positive bias in the near term.
The 85.30-85.40 zone is key to watch for the rupee as dollar demand from state-run banks around those levels had capped the currency’s gains earlier in the month, a trader at a foreign bank said.
The trader also pointed out that the currency’s 200-day moving average, around 85.35, is also a key technical level to watch for the rupee.
India’s benchmark equity indexes were trading slightly in the red while the yield on the country’s benchmark 10-year bond was nearly flat. (Reporting by Jaspreet Kalra; Editing by Eileen Soreng)
