Wilting dollar, upbeat risk tone offer little lift to the rupee

MUMBAI, Nov 27 (Reuters) – The Indian rupee was stuck in a narrow four-paisa range by mid-day on Thursday on subdued volumes, with traders noting that a softer dollar and an upbeat risk tone across Asia offered little traction to the currency.

The rupee was last at 89.2425 at 11.00 am IST, barely moved from Wednesday’s level of 89.27.

Throughout the session, the currency held to a tiny four-paisa corridor, as volumes were muted and activity largely confined to routine corporate and interbank flows.

Traders said the softer dollar and upbeat risk tone failed to lift the rupee, with the market still driven by importer demand and caution toward new positions. The price action, they said, showed how limited the appetite was to push the currency higher.

“Right now, dips (on dollar/rupee) are finding buyers, and higher up, there’s always the risk of the central bank leaning in, so it’s difficult for the market to build any real momentum,” a currency trader at a bank said.

The rupee’s range-bound performance came against a weaker dollar and a broadly positive risk tone. The dollar index slid further and investors priced in a high probability of a December Federal Reserve rate cut. Interest rate futures now assigned a chance of about 85% to the move, up from near 30% a week ago.

Meanwhile, India’s Nifty 50 Index climbed to an all-time high, boosted by the Wall Street rally fuelled by Fed cut expectations that spilled over into Asia.

In a technical view, Mecklai Financial said dollar/rupee remains above the 20- and 50-day simple moving average, keeping the short-term bias positive. It pegged support near 89.00 and resistance around 89.60.