Indian rupee on Wednesday was trading little changed against US dollar as many Asian markets remained shut for the Lunar New Year.
At 9.15am, the rupee was trading at 71.58 a dollar, up 0.01% from its previous close of 71.57. The home currency opened at 71.55 a dollar.
Traders are cautious ahead of the key Reserve Bank of India meeting on Thursday. A majority of bank treasury heads surveyed by Mint expects RBI to announce a status-quo policy, while changing the policy stance from calibrated tightening to neutral. However, some bankers are not ruling out a 25 basis points (bps) cut before the upcoming general election. Falling inflation, along with an expansionary budget, could push the RBI to maintain the policy rates unchanged, said a section of bankers.
So far this year, the rupee has declined 2.5%, while foreign investors have sold $30.60 million and $513.60 million in debt market.
The 10-year bond yield was trading at 7.38% from its Tuesday's close of 7.381%. Bond yields and prices move in opposite directions.
Traders are cautious as Federal Reserve Chairman Jerome Powell gives his first public comments following the January FOMC meeting and rate decision due later on Wednesday.
The dollar advanced before President Donald Trump’s State of the Union address Tuesday, with markets bracing for hints of further political escalation or clues on the outlook for trade talks, as many Asian trading desks remained shut for Lunar New Year.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 96.093, up 0.03% from its previous close of 96.067.