Rupee stable as traders anticipate gains amid limited Asian market activity

The Rupee was largely flat on Friday, following restricted movement in the Asian markets, with traders continuing to expect gains in the local currency.

The Rupee stood at 83.1425 against the US dollar as of 10:15 AM IST, compared with its close at 83.1225 in the previous session.

The US Dollar Index was growing near 103.32 in Asian hours, while the 10-year US Treasury yield extended its gains to 4.16 per cent following weaker-than-expected US jobless claims data.

While the Rupee has erased a substantial part of its gains from late last week and Monday, the bias remains to the upside, a foreign exchange trader at a private bank said.

The Rupee had risen to 82.77 on Monday, its highest level since early September last year.

"83 on the upside and 83.20 on the downside are key levels to watch for the Rupee. A break on either side could spur directional momentum," said the trader.

A string of US economic data, including strong retail sales and higher than expected consumer inflation, and pushback from central bank officials has prompted investors to pare bets on aggressive rate cuts by the Federal Reserve, offering support to the dollar.

Investors are currently pricing in a 54 per cent chance of a Fed rate cut in March, down from about 73 per cent as of January 11, according to CME's FedWatch tool.

"Though the technical trend for (Dollar-Rupee pair) is still weak. One should remain cautious as foreigners have turned net sellers in domestic equities," Dilip Parmar, a foreign exchange research analyst at HDFC Securities said.

Overseas investors have net sold Indian equities worth $463 million in January so far following net purchases of $7.9 billion in December.

(With Reuters Inputs)