Mumbai, Jan 31 The rupee eased on Tuesday against a stronger dollar, with investors keeping a close eye on equity markets while they awaited the domestic Union budget and the US Federal Reserve meeting.
The rupee fell to 81.67 per dollar by 10:15 am, compared to its previous close of 81.4950. The currency is headed for a monthly gain of about 1.3%, relatively less than its peers.
However, traders reckon the rupee has held up better than expected through the massive selloff in Indian equities after a US short-seller report on Adani Group last week flagged concerns about their debt levels and the use of tax havens.
"The rupee has been resilient in spite of the about $2.5 billion foreign portfolio outflow in January, the highest since June of last year," said Anindya Banerjee, head research - fx and interest rates at Kotak Securities.
"We suspect corporate inflows and some bit of intervention (from the central bank) may have played a part," he said, expecting the rupee's 81.40-81.80 rangebound trading to resolve into a trend before the weekend.
Budget focus
The budget - where the focus will be on the government's fiscal consolidation path - and the Fed meeting are both due on Wednesday and would likely be key triggers.
Ahead of that, India's annual pre-budget economic survey is due later in the day, in which the government is likely to peg GDP growth at 6-6.8% for 2023-24, the slowest in three years, Reuters reported.
Asian markets, Fed move
Meanwhile, most Asian emerging market stocks and currencies fell as the dollar index climbed above the 102 level overnight, with caution setting in ahead of the Fed meeting, which will be followed by European and England central bank decisions on Thursday.
While a 25-basis-point hike is widely expected from the Fed, a key marker would be how the officials respond to markets pricing in rate cuts later this year.