Currently, the pattern is shaping up to be the same as in December when the Reserve Bank of India (RBI) was not allowing the rupee to fall below 83 levels, a currency dealer at a private sector bank said. The RBI, at that time, was selling dollars via public sector banks, according to traders. So as long as the rupee remains above 83, trading activity will remain subdued, the dealer added. Major Asian currencies fell on Monday, bogged down by U.S. yields. The 10-year U.S. yield rose above 3.75% to a fresh six-week high and the two-year reached its highest level since November-end. The likelihood of more Federal Reserve rate hikes and the possibility that the rates would remain high for long prompted investors to avoid U.S. bonds. The U.S. consumer inflation data is due after Asian market hours on Tuesday, a print that will be closely watched by the bond and other markets. The U.S. data could shake the outlook for interest rates globally, said Amit Pabari, managing director at CR Forex. With the stunning U.S. labour market data last week, an upward surprise on inflation will be a concern, Pabari added.
The rupee premiums fell, tracking higher U.S. yields and USD/INR spot, with the 1-year implied yield falling to near 2.10%. (Reporting by Nimesh Vora; Editing by Janane Venkatraman)
