Rupee finds support following opening dip; eye on oil prices

MUMBAI, Aug 1 (Reuters) – The Indian rupee on Tuesday managed to find support after having opened on a weaker note on the back of a broadly higher U.S. dollar.

The rupee was at 82.31 to the dollar by 10:26 a.m. IST compared with 82.2450 on Monday. The local currency opened at 82.3050 and has been in a narrow three-paisa range.

Like last week, USD/INR is unable to move beyond 82.35-82.40, said a forex salesperson at a bank.

“Cash dollar demand (from importers) is there, which you can make out from the swap rate, but it’s not enough (to take USD/INR higher),” he said.

The USD/INR overnight cash swap rate was at 0.20 paisa, implying a rupee yield of 6.15%, about 25 basis points lower than the rupee call rate.

The Chinese yuan and other Asian currencies declined and the dollar index reached the highest in three weeks. The unexpected contraction in China’s manufacturing activity pulled the yuan and the rest of the Asian currencies lower. The dollar index rose to 102.06.

U.S. ISM manufacturing data due later in the day is expected to show that activity continued to contract in July. The ISM services print is due on Thursday.

Oil prices were a shade lower in Asia, having reached an over three-month high on Monday.

Brent crude is now at $85 and this was “a major problem” for the rupee, Anil Bhansali, head treasury at Finrex Treasury Advisors, said.

Reporting by Nimesh Vora; Editing by Sohini Goswami

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