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INR Stuck between Likely RBI Dollar Buys, Rise in Asia FX

MUMBAI, July 4 (Reuters) - The Indian rupee was little changed on Tuesday, unable to take advantage of the uptick in other Asian peers on likely dollar purchases by the Reserve Bank of India (RBI).

The rupee was at 81.9675 to the U.S. dollar by 10:50 a.m. IST, compared with 81.9575 in the previous session. The rupee had opened at 81.9150 and reached a high of 81.88.

"Like yesterday, it seems the RBI factor is in play. Buying the opening dip and then holding on," an FX spot trader said.

The RBI on Monday had bought dollars when rupee managed to reach a near two-month high of 81.75 on the back of dollar inflows, market participants said.

The Indian central bank's regular intervention on both sides has made rupee among the least volatile currencies in the Asia FX space.

"Rupee is stuck right now - RBI on bid side and market on offer," Anindya Banerjee, head research - FX and interest rates at Kotak Securities, said.

"Rupee has been trading in a narrow range for almost 3 months. Anyone who would have sold options, would have enjoyed the low volatility."

Other Asian currencies were mostly higher on Tuesday, not impacted by the a further uptick in U.S. yields. The 2-year U.S. yield climbed to 4.96% in Asia trading, its highest since March.

U.S. yields had dipped overnight following the weak U.S. manufacturing data, but reversed course later.

Increasing likelihood of a U.S. Federal Reserve rate hike this month and possibility of another in September or November is pushing near-maturity yields higher.

Reporting by Nimesh Vora; Editing by Varun H K

Source: Reuters

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