MUMBAI, Feb 11 (Reuters) – The Indian rupee traded in a tight range on Wednesday, wedged between a broadly weaker dollar and steady corporate hedging appetite, while expectations of volatility in the currency receded after jumping last week.
The rupee was at 90.53 per dollar as of 11:15 a.m. IST, slightly firmer than its previous close of 90.5775.
The currency has settled into a broad 90-91 trading range after a relief rally last week, sparked by the announcement of the U.S.-India trade deal.
While near-tenor implied volatility, a gauge of future expectations, had jumped to a seven-month peak immediately after the trade-deal announcement, it has since cooled as the rupee settled into a fresh range.
The 1-month implied volatility was last at 4.3% after rising to as high as 5.7% last week.
“In the near term, the 90.00–90.20 zone continues to act as a strong resistance for the rupee. As long as this area remains intact, USD/INR could slowly move higher, with the 91.00–91.20 range emerging as the next potential upside zone,” said Amit Pabari, managing director at FX advisory firm CR Forex.
Traders are also closely tracking foreign portfolio inflows following a modest rebound this month. Overseas investors have net bought more than $1.5 billion of local stocks in February so far, a reversal from the $4 billion of outflows seen last month.
India’s benchmark equity index, the Nifty 50 was little changed on the day.
Elsewhere, the dollar index was down 0.3% at 96.6 while Asian currencies were slightly higher, with investors awaiting the release of key U.S. labour market data later in the day.
Nonfarm payrolls are expected to have risen by 70,000 in January while the unemployment rate is seen holding steady at 4.4%.
(This story has been corrected to say 90.00–90.20 zone is resistance, not support for the rupee, in paragraph 6)
