Indian rupee rises 6 paise against UAE dirham in early trade

India's state election results are "likely positive for equity inflows and reduces some pressure for INR depreciation in the near-term", says expert

By Agencies

Published: Mon 4 Dec 2023, 10:38 AM

Last updated: Mon 4 Dec 2023, 10:40 AM

The rupee appreciated 6 paise to 83.27 against the US (23.13 against UAE dirham) dollar in early trade on Monday amid a positive trend in domestic equities and foreign fund inflows.

At the interbank foreign exchange, the rupee opened at 83.28 against the dollar and then touched a low of 83.30, and a high of 83.27 against the greenback.

On Friday, the rupee settled at 83.33 against the dollar (23.24 against UAE dirham).

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Prime Minister Narendra Modi's Bharatiya Janata Party won the elections in three of the five Indian states that had recently gone to the polls.

The elections results, "are likely positive for equity inflows, and as such reduces some pressure for INR depreciation in the near-term," MUFG Bank said in a note on Monday.

U.S. Treasury yields dropped on Friday after comments from Fed Chair Jerome Powell signalled optimism that the central bank's current policy rate may be adequate to complete the job of combating inflation.

"Having come so far so quickly, the (Federal Open Market Committee) is moving forward carefully, as the risks of under- and over-tightening are becoming more balanced," Powell said.

The 10-year U.S. Treasury yield inched up in Asia after falling to a low of 4.19 per cent on Friday, its weakest level since early September.

Fed futures are pricing in a 60 per cent chance of a rate cut at the Fed's March meeting, up from 21 per cent over a week ago, according to the CME's FedWatch tool.

Most Asian currencies edged higher and the dollar index was up slightly at 103.28.

Over the week, investors will keep an eye on U.S. economic data for further cues on Fed policy while awaiting the Reserve Bank of India's policy decision on Friday.

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