A customer hands Indian currency notes to an attendant at a fuel station in Mumbai, India, August 13, 2018. REUTERS/Francis Mascarenhas/File photo Acquire Licensing Rights
MUMBAI, Sept 22 (Reuters) – The Indian rupee rose on Friday after JPMorgan said it will include the country’s bonds in its emerging market index.
The currency, however, came off its opening highs on dollar demand from importers.
The rupee was at 82.9350 against the U.S. dollar as of 11:25 a.m. IST compared with 83.09 in the previous session. The currency had opened at 82.8225.
“Expectedly, you have importers taking advantage of the dip (on USD/INR),” a currency dealer at a bank said.
“More so, there is not much appetite to sell (USD/INR) because of what is happening on U.S. yields.”
India’s inclusion on JPMorgan’s index will start on June 28, 2024, and extend over 10 months with 1% increments on its index weighting.
“We believe a total of $20-25bn should come in over the index inclusion horizon, but some front loading is reasonable,” said Rahul Bajoria, head of emerging market Asia (ex China) economics at Barclays.
Indian government bond yields fell on Friday, with the benchmark 10-year and the 14-year bond yields slipping to their lowest level in two months.
The 10-year U.S. Treasury yield rose to 4.50% in Asia, the highest since 2007, on expectations that the U.S. Federal Reserve is likely to keep rates higher for longer.
The dollar index was hovering near 105.50.
“The upmove in the rupee will be short-lived… looking at other tail risk factors including oil prices,” said Arnob Biswas, head of foreign exchange research at SMC Global Securities.
Brent crude oil futures rose 0.6% to $93.86. The contract is up 8% this month on worries over supplies.
Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala
Our Standards: The Thomson Reuters Trust Principles.
