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India rupee may inch higher tracking recovery in Asian peers

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MUMBAI — The Indian rupee is tipped to open higher versus the dollar on Thursday as the safe-haven greenback retreated on slightly improved risk appetite.

The rupee is expected at 79.75-79.77 against the dollar in initial trades, compared with 79.8075 in the previous session.

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The dollar index inched lower to near 108.40, while Asian currencies were up in the range of 0.2% to 0.5% due to less risk aversion. The S&P 500 Index on Wednesday snapped a three-day losing streak, boosting Asian shares.

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Meanwhile, oil prices inched higher in Asian trading, with Brent crude futures climbing to near $102 a barrel. The benchmark is now up more than $10 from the lows witnessed last week.

High commodity prices should keep rupee under pressure, BofA Securities said in a note.

The rupee “should do marginally well” at the open, tracking Asian cues, but oil “will make sure there is not much upside,” a trader at a Mumbai-based bank said.

The local unit has been rangebound this week, having traded in a near 20 paisa band. In contrast, trading in other Asian currencies has been quite volatile amid policy easing by the Chinese central bank and expectations that the Federal Reserve would keep rates high for longer.

“It is quite evident from the recent price action on the rupee that there is currently no appetite to take it below 80,” the trader said.

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Traders now await the Fed Chair Jerome Powell’s speech at an annual gathering in Jackson Hole, Wyoming on Friday to assess the pace of future rate hikes.

Treasury yields have been marching higher ahead of Powell’s speech, signaling that he may strike a hawkish tone. The 10-year Treasury yield on Wednesday reached its highest level in just under two months.

KEY INDICATORS: ** One-month non-deliverable rupee forward at 79.96; onshore one-month forward premium at 21.25 paise ** USD/INR NSE August futures closed on Wednesday at 79.90 ** USD/INR forward premium as of Aug. 24 for end current month is 2 paise ** Dollar index down at 108.36 ** Brent crude futures up 0.7% at $102 per barrel ** Ten-year U.S. note yield at 3.1%, India 10-yr bond yield at 7.29% ** SGX Nifty nearest-month futures up 0.5% at 17,700 ** As per NSDL data, foreign investors bought a net $132.4mln worth of Indian shares on Aug. 23 ** NSDL data shows foreign investors bought a net $401.7mln worth of Indian bonds on Aug. 23 (Reporting by Nimesh Vora; Editing by Anil D’Silva)

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