INDIA RUPEE-Importer hedging impedes rupee's upside momentum; premiums fall more

By Nimesh Vora MUMBAI, April 11 (Reuters) - The Indian rupee declined slightly to the U.S. currency on Tuesday, likely on account of persistent dollar demand from importers looking to hedge near-maturity liabilities, traders said. The rupee was at 82.0475 to the dollar by 11:00 a.m. IST, down from 81.98 in the previous session. The local currency on Monday reached 81.78, the highest level in a month. "It's a little surprising that we are back to 82. We have to put it down to the routine dollar demand from oil and other importers," a trader at a mid-sized private sector bank said. Importers remain inclined to hedge their near-term payables when USD/INR drops below 82, he said. The near support level for the rupee is pegged at 82.20. "Once USD/INR pair surpasses the 82.20 zone, it would yet again move towards 82.50-82.70 territory before marching higher," Amit Pabari, managing director at CR Forex, said. "All eyes are on the release of inflation data in India and the U.S." The India and U.S. inflation data are due on Wednesday. The U.S. print is considered more crucial by traders from the rupee's point of view, and will be instrumental in the Federal Reserve's decision on whether to raise rates at its May meeting. Economists polled by Reuters expected core consumer price index to rise 0.4% month-on-month. Futures reckon there is now a near-70% chance that the Fed will hike rates in May, following the U.S. jobs report and on diminishing worries over the U.S. banking sector.

Rupee premiums dipped more, with the 1-year implied yield now at 2.38%. On bank of the Reserve Bank of India's unexpected status quo on rates, the 1-year is down about 20 bps. (Reporting by Nimesh Vora; Editing by Varun H K)