The Indian rupee held steady on Thursday, as demand for dollars from local oil companies offset the positive impact of lower US bond yields and a weaker dollar. The rupee closed at 83.5925 per dollar, barely budging from its previous close of 83.5825 on Tuesday (Indian markets were shut on Wednesday). This stability came despite a broader decline in the dollar index, which fell 0.1 per cent after hitting a four-month low on Wednesday. The weakening dollar was driven by hopes of interest rate cuts from the Federal Reserve and a strengthening Japanese yen fueled by intervention speculation. Most Asian currencies experienced slight depreciation on Thursday, with the Indonesian rupiah leading the losses by 0.3 per cent. The yen has rebounded from its 38-year low on July 3, and the offshore Chinese yuan has also strengthened from its lowest point since November. The trader noted that the rupee's appreciation has been constrained by dollar demand from domestic oil companies and other importers in recent trading sessions. Looking ahead, expectations of Fed rate cuts are impacting the currency market. The one-year dollar-rupee forward premium reached a five-month high of 1.75 per cent, reflecting growing anticipation of a policy rate easing in September. FX advisory firm IFA Global expects the rupee to remain subdued amidst broad dollar weakness. He predicted a tight trading range for the rupee, likely between 83.40 and 83.65 per dollar. Attribution: Reuters
