Possible exhaustion of dollar short positions in the wake of the Reserve Bank of India's intervention may be another reason, the trader added.
Other Asian currencies were mostly lower in the wake of the overnight rise in U.S. yields. The two-year U.S. yield climbed back to near 4% ahead of the U.S. inflation data due Wednesday. The dollar index was marginally higher at 101.48.
The inflation print comes after the Federal Reserve last
week signalled a pause contingent on how economic data evolves
and in the backdrop of investors pricing in rate cuts from
September onwards. "(A) Stronger (inflation) print could push back market's
dovish expectations and that would pose upward risk to the U.S.
dollar," OCBC analysts said in a note.
Tracking the rise in U.S. yields, rupee forward premiums
fell. The 1-year implied USD/INR yield dropped to 2.17%.
"There is good receiving interest from the trading
perspective. Spot at near 82 provides an added excuse," the
trader said.
(Reporting by Nimesh Vora and Nallur Sethuraman in Mumbai;
Editing by Sohini Goswami)
