Rupee Down As Oil Prices Gain Further, Forward Premiums Fall

The Indian rupee eased slightly on Tuesday as oil prices rose and investors assessed China's move to ease COVID curbs while cases continued to rise in the country.

The rupee was at 82.73 per U.S. dollar by 10:33 a.m. IST, compared with its previous close of 82.65.

Asian currencies were mixed, with the Chinese yuan trading flat after Beijing removed quarantine requirements for inbound travellers.

Equities cheered the news as stock markets jumped across the region. However, COVID infections were still on the rise in China and putting a strain on its healthcare system.

The dollar index was flat in thin trade in the holiday season, while oil prices were headed towards $85 per barrel.

The rupee is set to be the worst-performing Asian currency this year as it struggled to gain despite a declining greenback since November. Traders have cited huge cash dollar demand in the market.

"The rupee should be protected at 83 or we risk seeing sharp falls" like over the past couple of months, said Sajal Gupta, head of forex and rates at Edelweiss Financial Securities.

"The currency trading near record lows is not a comfort," Gupta said, adding a sustained decline in line with other currencies would be manageable, rather than "extreme moves."

The rupee has traded in a narrow range over the past two weeks and found support around the 82.85-82.90 levels. It hit a record low of 83.29 in October.