Rupee's opening rally falters on dollar demand from importers, speculators

MUMBAI, July 13 (Reuters) - The Indian rupee rose on Thursday, helped by the U.S. currencys slide to its lowest in more than a year, but was off its opening highs on dollar demand from importers and speculators.

The rupee was at 82.04 to the dollar at 10:30 a.m. IST, compared with 82.2475 in the previous session and a more-than-one-week high of 81.9525 in opening trades.

The currency is on course to log a fourth straight day of gains.

\“After testing 82 at the open, the rupee saw the usual dollar demand from oil companies and short sellers (on the USD/INR pair) rushed for cover,\” a trader at a private sector bank said.

\“It is unlikely that the RBI (Reserve Bank of India) will let the rupee appreciate sharply above 81.80.\”

The dollar index declined to 100.41, its lowest since April 2022, in Asian trading hours, helping regional currencies such as the Korean won and the Malaysian ringgit jumped more than 1%, after U.S. inflation cooled at a faster-than-expected pace in June.

Core inflation fell to a 20-month low of 4.8% last month, which is \“potentially even more encouraging than it looks,\” Capital Economics said in a note.

The downward trend in core inflation is set to accelerate over the second half of the year, it said.

Currently, markets have priced in a 25-basis-points rate hike at the Federal Reserves next meeting, due on July 25-26, with futures showing investors do not expect further increases.

Expectations that the Feds rate hike cycle is nearing an end lifted risk appetite in the region. Asian shares rose, while the 10-year U.S. yield slumped 12 bps on Wednesday.

Dollar rupee forward premiums jumped on the back of falling U.S. yields. The one-year implied yield touched a two-week high of 1.75% earlier in the session.

Reporting by Siddhi Nayak; Editing by Savio DSouza

Our Standards: The Thomson Reuters Trust Principles.