"Right through from the open, there have been decent dollar bids," a trader at a public sector bank said.
It could be "a bit of" position squaring after the 81.80 support (on USD/INR pair) held, he said, adding that the rupee was in the middle of the near-term support and resistance levels of 82.20 and 81.80 respectively. Asian currencies struggled on the back of U.S. data that supported at least one Federal Reserve rate hike.
Confidence among U.S. single-family homebuilders improved for a fourth straight month in April, while the New York manufacturing index increased for the first time in five months in April as measures of new orders and shipments surged. Futures indicate that investors are now almost certain that the Fed will raise rates in May. The 2-year U.S. yield overnight reached its highest level since March 22. Investors were betting that with U.S. data holding up and the U.S. banking turmoil having receded, the focus of Fed will be back on inflation, according to analysts. The dollar index rose by the most in over a month overnight. Few analysts doubted that the dollar's resurgence will sustain. "The U.S. dollar's counter-trend comeback appears to be a correction following a significant decline last week," Anindya Banerjee, head research - forex and interest rates at Kotak Securities said. "A much-needed correction, which could be followed by further declines in the coming days." The rupee forward premiums were slightly lower following the overnight rise in Treasury yields. The 1-year implied yield was at 2.31%, hovering at its lowest since mid-March. (Reporting by Nimesh Vora; Editing by Nivedita Bhattacharjee)
