Rupee ticks up on likely inflows related to an equity index rejig, traders say
MUMBAI, June 2 (Reuters) - The Indian rupee strengthened on Monday, aided by likely dollar inflows related to the rejig of a global equity index that helped the local currency sidestep a dip in most of its regional peers as U.S.-China trade tensions continued to simmer.
The rupee rose to 85.4075 per U.S. dollar as of 11:00 a.m. IST, up 0.2% from its close of 85.5775 in the previous session.
Traders said the rupee was supported by dollar sales from at least two large foreign banks on the day, likely related to the rejig of a global equity index.
The dollar index, meanwhile, was down 0.1% at 99.2 as uncertainty about U.S. trade policies rebounded after President Donald Trump said late on Friday that he plans to double duties on imported steel and aluminium and accused China of violating a bilateral deal to roll back tariffs.
Asian currencies and stocks were mostly lower, with the offshore Chinese yuan down about 0.2% at 7.2163. India's benchmark equity indexes, the BSE Sensex (.BSESN), opens new tab and Nifty 50 (.NSEI), opens new tab, declined 0.5% each, tracking their regional peers.
The rupee "remains in consolidation mode, with a broad range of 85-86," said Anil Bhansali, head of treasury at Finrex Treasury Advisors.
Bhansali recommends that exporters wait for 85.70 to sell dollars, while importers can hedge around 85.25 levels.
The focus this week will be on the Reserve Bank of India's monetary policy meeting on Friday, at which a 25-basis-point rate cut is widely expected.
"Despite no pressing need for a third successive rate cut on June 6, we expect the MPC (monetary policy committee) to cut - an opportunistic move amid the lower-than-expected inflation outcome and outlook, and retain the stance as 'accommodative'," Barclays said in a note.
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