Rupee sticks to muted price action, implied volatility retreats

Time of India

a day ago

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The Indian rupee ended slightly higher on Wednesday, sticking to rangebound price action for a third consecutive session on two-sided client flows and the absence of cues to firm a directional bias on the currency.The dollar-rupee pair's implied volatility, a gauge of future expectations, has receded on the back of muted moves in the currency. The 1-month gauge eased to about 4.4%, the lowest in over one month.On the day, the rupee closed at 85.51 against the U.S. dollar , up slightly from its close of 85.6025 in the previous session. Asian currencies were largely steady as well while the dollar index was hovering sideways around the 99-handle.Mild dollar sales from foreign banks helped the rupee tick higher in early trading but routine corporate dollar demand stood in the way of the local currency extending its rise, a trader at a state-run bank said.India's benchmark equity indexes, the BSE Sensex and Nifty 50 , ended slightly in the green, tracking a rise in regional equities as markets gave a guarded welcome to the latest signs of progress in trade talks between the United States and China."The dollar remains one of the best gauges of trade sentiment. While it has held up generally well early this week, it hasn't built on the late-week momentum following the US-China meeting announcement," ING Bank said in a note.Worries about the impact of wide-ranging U.S. tariffs have weighed on the dollar this year and left it nursing losses of more than 8.5% against major peers.The focus now turns to U.S. consumer price inflation data, due later on Wednesday, which is expected to show month-on-month core consumer prices rose 0.3% in May, according to a Reuters poll, slightly higher than the 0.2% rise in the previous month.