By Nimesh Vora
MUMBAI, May 8 (Reuters) - The Indian rupee rose on
Monday, helped by dollar offers of foreign banks that, traders
said, were likely for their custodial clients.
The rupee was quoted at 81.8175 per U.S. dollar by 10:34
a.m. IST, up from 81.80 in the previous session.
"Once again, we are seeing decent sized (dollar) selling
from foreign banks, which ties to the recent pickup in equity
inflows," a spot trader said.
It's "fairly straightforward" to deduce that the USD/INR
risks a larger fall only if its drops below 81.60, the trader
said.
The rupee was helped by the upbeat risk appetite following
the monthly U.S. jobs report on Friday, which, to an extent,
alleviated concerns over the economy.
The report showed the U.S. economy added 253,000 jobs in
April, while the unemployment rate unexpectedly declined to an
over-50-year low of 3.4%.
Economists polled by Reuters had expected 180,000 job
additions and an unemployment rate of 3.6%. Wages grew by 0.5%
against a 0.3% forecast from the economists.
U.S. equities surged, while Treasury yields rose following
the data. That pulled rupee forward premiums lower, with the
1-year falling to 2.20%.
The focus now shifts to U.S. inflation data due Wednesday,
with economists expecting a 0.4% month-on-month increase in the
core inflation rate.
The data will draw scrutiny in the wake of increasing
confidence that the Federal Reserve will opt to pause its rate
hikes at its meeting in June.
In the backdrop of the U.S. payroll data, a
higher-than-expected inflation reading would be disruptive to
the risk appetite and rate expectations, said Srinivas Puni,
managing director at QuantArt Market Solutions.
"If inflation is broadly in line, one might expect a longer
period of meandering currencies and the rupee."
(Reporting by Nimesh Vora; Editing by Savio D'Souza)
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