Rupee holds steady against Dollar amid Asian currency weakness

Rupee holds steady: The rupee closed Tuesday's trading session with minimal change against the US dollar, maintaining stability amidst a backdrop of weakening Asian currencies. Closing at 83.5075 against the dollar, the rupee's movement remained confined within a narrow range throughout the day, fluctuating between 83.4775 and 83.5175.

While the dollar index recorded a marginal 0.1 per cent uptick to 105.3, several Asian currencies experienced declines, notably the Thai baht, which led losses with a 0.3 per cent drop. However, the rupee found support from offers to sell dollars facilitated by state-run banks, mitigating downward pressure, as observed by market traders.

Analysts suggest that a breach below the crucial threshold of 83.58 could pave the way for further depreciation towards 83.75, following the rupee's recent record low of 83.5750 on April 19.

In parallel, US Treasury yields exhibited a downward trend during Asian trading hours, with the 10-year yield slipping to 4.46 per cent and the 2-year yield declining 2 basis points to 4.81 per cent.

Commenting on the near-term outlook, Gaurang Somaiya, a foreign exchange research analyst at Motilal Oswal Financial Services, anticipates rupee stability within its existing range, attributing the forecast to limited impactful domestic and global developments.

Investor attention remains focused on Federal Reserve policymakers' statements for insights into potential adjustments to policy rates, amidst market expectations of nearly two rate cuts by the Fed in 2024.

Considering the subdued US economic calendar this week and possible dovish signals from Europe, the ING Bank projects continued support for the dollar index, potentially pushing it towards the 105.50/75 range.

(with Reuters inputs)