Rupee firms; dip in US yields, RBI cash withdrawal plan lift forward premiums
MUMBAI, June 25 (Reuters) - The Indian rupee edged higher on Wednesday, as global markets steadied after a ceasefire between Iran and Israel held, offering comfort to stocks and currencies in Asia.
Dollar-rupee forward premiums rose as the Indian central bank's announcement of a measure to withdraw excess banking system liquidity lifted near forwards, while a dip in U.S. bond yields aided far tenors.
The 1-year dollar-rupee implied yield rose 5 basis points to 1.94% while the 1-month forward premiums ticked up to around 12 paisa.
After market hours on Tuesday, the Reserve Bank of India said it will conduct a seven-day variable reverse repo rate auction worth 1 trillion rupees ($11.64 billion) on Friday.
The 1-year U.S. Treasury yield was hovering around 4% in Asia trading after falling on Tuesday.
The rupee was rose 0.2% to 85.82, as of 10:45 a.m. IST. The currency had rallied 0.9% on Tuesday as oil prices slumped after a ceasefire between Iran and Israel was announced.
"Tuesday's rally offered a much-needed breather for the rupee, but the key question now is sustainability," said Amit Pabari, managing director at FX advisory firm CR Forex.
"As long as crude oil remains subdued and global risk sentiment stays supportive, the rupee may find a cushion around the 85.80–86.00 zone," Pabari added.
Asian currencies were trading mixed while the dollar index held below the 98 handle. Benchmark Indian equity indexes, the Nifty 50 (.NSEI), opens new tab and the BSE Sensex (.BSESN), opens new tab, rose about 0.7% each, tracking positive cues from gains in global peers.
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