Rupee gains for second day

The Indian rupee rose for a second straight session against the US dollar on Tuesday, mirroring similar moves in Asian peers, as risk appetite in the region rose on fresh bets of the Federal Reserve nearing the end of its rate tightening cycle.

The rupee ended at 82.3650 against the dollar compared with 82.5650 in the previous session. The currency gained 0.25 per cent on the day, adding to Monday's 0.2 per cent rise.

Tuesday's gain is the local currency's best daily performance since June 16.

The rupee is likely to find some resistance near the 82.00-82.20 levels, said Jigar Trivedi, senior research analyst - currencies and commodities at Reliance Securities.

The Korean won led Asian currencies higher on Tuesday, climbing nearly 1 per cent, while most other regional currencies were up at least 0.2 per cent against the greenback. Asian shares also ended higher after US equities halted a three-day losing streak on Monday.

The dollar index dropped to an over two-month low of 101.67 on Tuesday, ahead of the crucial US inflation data due on Wednesday. US consumer prices are seen climbing 3.1 per cent year-on-year in June, compared with a 4.0 per cent rise in May, according to a Reuters poll.

This, analysts said, would provide more leeway for the Fed to end its monetary policy tightening soon.

The forex market has already discounted one 25-basis point (bps) hike at the Fed's July meeting, said Trivedi. However, there is speculation that it may not go for another hike later this year, he added.

Fed officials on Monday indicated the end to the rate hike cycle was near, sending US yields lower.

The 10-year yield dropped to 3.95 per cent in intraday trades, extending Monday's four-bps fall. The two-year US yield was down to 4.8260 per cent from 5.12 per cent hit last week.

The dollar-rupee far forward premiums rose, tracking a fall in US yields, with the one-year implied yield ending 3 bps higher at 1.64 per cent.