MUMBAI, Aug 29 (Reuters) – The Indian rupee edged up on Thursday, helped by stronger Asian currencies and expectations of MSCI-linked inflows.
As of 10:52 a.m. Indian Standard Time, the rupee was trading at 83.9050 against the US dollar, up from 83.9525 the previous day. Asian currencies rose 0.1-0.4 percent, with the dollar index slipping to 100.94.
An increase in India's weighting in the MSCI Emerging Markets Index starting on Friday is expected to attract inflows of up to $3 billion, according to Nuvama Alternative and Quantitative Research.
The rupee “has only seen a modest rise but we will accept this appreciation given the magnitude of the challenges it is facing,” a currency trader at a bank said, adding that the equity inflows will only provide temporary relief to the rupee and it is likely to remain in a narrow range for the time being.
The rupee's annualized realized fluctuation based on daily price fluctuations is less than 2%. The Reserve Bank of India has maintained tight control over the rupee for a long time.
Srinivas Puni, managing director at foreign exchange consultancy Quantart Market Solutions, said there was “nothing particularly noteworthy” about the rupee, which has again settled within a range.
Data on the US labour market is expected to be important over the next few days.
“Given that the Fed's focus is now on the labour market, the US employment data next Friday will be a key event for the dollar and to some extent the rupee. Till then, we expect the rupee to remain range bound,” Puni said.
Last Friday, Federal Reserve Chairman Jerome Powell said a further slowdown in the U.S. labor market would be unwelcome, and analysts say that could lead the Fed to cut interest rates by 50 basis points next month if employment data is significantly weaker.
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Reporting by Nimesh Vora; Editing by Nivedita Bhattacharjee
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