Rupee bogged down by month-end importer dollar bids, firmer greenback
MUMBAI, May 28 (Reuters) - The Indian rupee declined on Wednesday in the face of month-end dollar demand from importers and a broad recovery in the greenback following better-than-expected U.S. consumer confidence data.
The rupee weakened to 85.6575 against the U.S. dollar as of 11:20 a.m. IST, down 0.3% on the day.
Traders pointed to a heightened appetite to buy dollars at the daily reference rate published by the Reserve Bank of India, likely spurred by month-end corporate payments.
The daily fix was last quoted at 0.40/0.60 paisa premium, a trader at a Mumbai-based bank said.
Anticipation of portfolio dollar outflows related to an equity block deal is prompting some intra-day speculative bets, weighing on the rupee, the trader said.
British American Tobacco (BATS.L), opens new tab said on Tuesday it intends to sell a 2.3% stake in Indian consumer goods company ITC (ITC.NS), opens new tab, worth about $1.4 billion in a block trade deal.
In the near-term, the rupee is expected to hover between 84.80 and 85.80, said Amit Pabari, managing director at FX advisory firm CR Forex.
The dollar index, meanwhile, rose 0.3% to 99.8, boosted by upbeat economic data, which also helped Wall Street surge overnight as investors returned from an extended weekend break.
Asian equities were mostly stronger on the day but India's benchmark indexes, the BSE Sensex (.BSESN), opens new tab and Nifty 50 (.NSEI), opens new tab, were slightly in the red.
The country's benchmark 10-year bond yield eased below a key level, propelled by bets of deeper interest rate cuts by the central bank and comforted by a fall in long tenor U.S. Treasury yields.
"Broadly, we saw DM (developed market) curves bull flatten amidst hopes that there could be more policy support for long-end bonds. Month-end flows probably helped as well," DBS said in a note.
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