Rupee goes up marginally

The Indian rupee rose on Monday, but higher near-maturity US Treasury yields were expected to limit the upside for the currency.

The rupee was at 82.61 against the US dollar by 10:35 a.m. IST, compared with 82.6475 in the previous session. The domestic currency reached an intraday high of 82.5325.

The two-year US Treasury yield climbed to 5.10 percent, just two basis points shy of year-to-date highs. Federal Reserve Chair Jerome Powell reaffirmed on Friday that the central bank remains focused on hitting its 2 percent inflation target, signalling rates will likely remain higher for longer.

Higher US yields will keep the dollar bid and the rupee is not likely to see much upside from here, traders said.

The rupee is expected to be in the 82.40-82.80 range during the week, a foreign exchange trader at a state-run bank said.

"Possible equity flows (due to MSCI rebalancing) are likely to support the rupee."

Key US economic data is due this week including core PCE inflation and non-farm payroll numbers. India's GDP print for the June quarter will be released on Thursday.

"While India's GDP numbers are unlikely to have a sizeable impact, US data is something to watch for in case it springs positive or negative surprises," said Abhilash Koikarra, head of forex at Nuvama Professional Clients Group.

Nuvama is advising importers to cover their hedges around 82.40 levels and exporters to increase their hedging at 82.70/75 levels, Koikarra said.

Meanwhile, India's foreign exchange reserves posted the steepest decline in over six months, falling by $7.27 billion from the prior week.