MUMBAI, Nov 23 (Reuters) – The Indian rupee weakened on Wednesday, tracking mixed Asian cues and a weaker Chinese yuan, with traders expecting a narrow trading range ahead of the release of minutes of the U.S. Federal Reserve’s last meeting.
The rupee was at 81.79 per dollar by 0451 GMT, compared to its previous close of 81.6650.
The rupee will likely trade around 81.80 due to dollar demand, said a private bank trader, but saw a less likelihood of a slide towards 82. The strategy is to buy on dips at USD/INR and sell around the current level remains, they added.
Bankers and brokers told Reuters that state-run banks were offering dollars at around 81.80-81.90 over the last two sessions, possibly on behalf of the Reserve Bank of India, which has narrowed the trading range for the currency.
Despite a softer dollar, Asian currencies struggled to gain, with the yuan dropping 0.4%.
China’s major cities Shanghai and Beijing ramped up mobility restrictions due to a surge in COVID cases, throwing further doubt on when the world’s second-largest economy will reopen completely.
However, Asian equities were broadly higher, with Indian stocks (.NSEI) up 0.3%, following a jump in their U.S. counterparts overnight.
The dollar index steadied at 107.1 after sliding earlier as investors awaited the release of the minutes of the Fed’s November policy meeting later in the day for some insight into how officials view economic conditions.
Since last week, several Fed members have kept up their hawkish tone and signalled that rates would continue to rise and may stay higher for longer.
Markets are currently pricing in an over 75% probability of a 50 basis point hike next month.
A drop in U.S. yields ahead of the data release also weighed on the greenback, with the benchmark 10-year yield around 3.75%, down 6 bps this week so far.
Reporting by Anushka Trivedi in Mumbai; Editing by Savio D’Souza
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