Rupee in narrow range, avoids selloff on Asian currencies

By Nimesh Vora

MUMBAI (Reuters) - The Indian rupee held a narrow range against the U.S. dollar on Friday, largely avoiding the losses of its Asian peers, with the currency continuing to trade above the closely watched 82.90-83.00 level.

The rupee was quoting at 82.7475 to the dollar at 10:50 a.m. IST, barely changed from 82.7175 in the previous session. The rupee has been in a 82.74 to 82.80 range so far.

In comparison, the Korean won tumbled more than 1%, and the Malaysian ringgit and the Thai baht were each down 0.6%. The offshore Chinese yuan declined below 6.8850 to the dollar - its lowest level in six weeks.

The rupee's outperformance was in-line with the pattern that has been prevailing of late, a trader at a private sector bank said.

At the current level, the rupee is less sensitive to the dollar index than the rest of Asia, he added.

The dollar index was at its highest level since early January, supported by U.S. yields. Treasury yields continued to march higher, supported by U.S. data and hawkish Federal Reserve comments.

U.S. data released on Thursday showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, while monthly producer prices increased by the most in seven months in January.

This came on the back of a U.S. jobs report and consumer inflation print, both of which underpinned more Fed rate hikes.

Two Federal Reserve officials said on Thursday the U.S. central bank should have lifted interest rates more than the 25 basis points it did at its last meeting, and warned that additional hikes in borrowing costs are essential to lower inflation back to desired levels.

The Fed terminal rate hike expectations rose to near 5.30%

"We have seen U.S. data push up pricing of terminal Fed Funds and the dollar has reverted to rising in sync with real rates," Societe Generale said in a note.

(Reporting by Nimesh Vora)