MUMBAI, Feb 7 (Reuters) - The Indian rupee ended little changed against the U.S. dollar on Tuesday, having traded in a narrow range ahead of the Reserve Bank of India’s policy decision and the Federal Reserve Chair Jerome Powell’s speech.
The rupee last traded at 82.70 to the dollar, compared with 82.7250 in the previous session. The intraday range for the local currency was 82.64 to 82.7950.
We would have to say that the proceedings for the day were along expected lines, with the 82.80 level proving a hindrance for dollar bulls, a trader at a Mumbai-based bank said.
The 82.80-83.00 level will be quite difficult to conquer without big surprises from either Powell or the RBI, he added.
The RBI is widely expected to raise rates by 25 basis points (bps) on Wednesday. For the rupee, the focus will be on whether the RBI changes its stance from ‘withdrawal of accommodation’ to ‘neutral’.
Powell’s comments later on Tuesday will invite more than the usual scrutiny as they come in the wake of a U.S. jobs report that blew past all expectations.
Investors have already priced in a higher terminal rate since the report, and cut back on the quantum of rate cuts they expect later this year.
“This could be a platform for Powell to reiterate and emphasize the outlook for further rate increases after the blockbuster employment report,” Societe Generale’s Kenneth Broux said in a note.
The rupee forward premiums, tracking the hawkish Fed outlook, added to Monday’s slide. The 1-year implied yield declined to 2.10%, the lowest level in a month. (Reporting by Nimesh Vora; Editing by Savio D’Souza)
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