USD/INR hovers above 3-week low as dollar and US yields ease

India’s Rupee traded within a relatively narrow range against a softer US Dollar on Tuesday and as US Treasury yields dropped.

The USD/INR pair continued to hover above recent three-week low of 82.3775, while dollar demand from corporate entities heightened.

“The big corporates (who are importers) are quite active on the dips (on USD/INR), which, in the current context, makes sense,” an unnamed Forex salesperson at a private bank was quoted as saying by Reuters.

“Then there is the usual (dollar) demand that we see at this time of the month.”

The US Dollar Index climbed as high as 104.447 on Friday, a level not seen since June 1st, after Fed Chair Jerome Powell said further rate increases might be needed to bring inflation back down to target.

With Powell delivering more hawkish remarks at the annual Jackson Hole Economic Policy Symposium than he did in July, market players were prompted to raise the odds of one more interest rate increase by the end of the year.

And, since the Fed Chair stressed on the importance of upcoming US macroeconomic data, market focus this week will be set on US Non-Farm Payrolls, core PCE inflation and personal spending figures.

The DXY was last down 0.03% to 103.950.

The yield on US 2-year Treasury Notes dropped to 4.988%, after surging to 5.1040% on Monday.

As of 7:22 GMT on Tuesday USD/INR was edging up 0.11% to trade at 82.6700. Last week, the exotic Forex pair went down as low as 82.3775. The latter has been the pair’s weakest level since August 2nd (82.3050).