Rupee holds steady amidst mixed regional currencies

Rupee holds steady: The rupee remained largely unchanged on Thursday, contrasting with gains seen in other Asian currencies boosted by a decline in US bond yields.

At 10:20 am, the rupee was trading at 83.5025 against the US dollar, nearly flat compared to its previous close at 83.52. Early trading saw the currency fluctuating within a narrow band of 83.50 to 83.51.

Recent sessions have witnessed the rupee trading in a mostly rangebound manner, reducing volatility expectations, with the 1-month implied volatility dropping to 1.65 per cent, its lowest since March 7.

The dollar index fell below 105, contributing to gains in most Asian currencies. The Korean won led the pack with a 0.3 per cent rise ahead of the closely watched US inflation data scheduled later in the day.

Analysts are closely monitoring the inflation figures, as they will likely influence expectations regarding the Federal Reserve's future policy actions. Currently, interest rate futures indicate a 73 per cent probability of a rate cut in September, according to CME's FedWatch tool.

Lloyd Chan, senior currency analyst at MUFG Bank, noted potential dual risks to US inflation: subdued economic conditions and geopolitical tensions.

Economists polled by Reuters anticipate the core US CPI to remain steady at 0.2 per cent month-on-month in June.

Traders anticipate the rupee to trade within a range of 83.45 to 83.55 during today's session, influenced by routine importer demand for dollars.

Apart from US inflation data, market participants will also focus on speeches from Federal Reserve officials later in the day, which could provide further insights into future monetary policy directions.

(with Reuters inputs)