MUMBAI: The Indian rupee inched up to its highest level in nearly a month in early trading on Tuesday but traders expect equity-related outflows and importer dollar demand to hurdle further gains in the local unit.

The rupee was at 83.3250 against the US dollar as of 10:00 a.m. IST, compared with its close at 83.3350 on Friday. Indian financial markets were shut on Monday. The currency touched a peak of 83.30 in opening trades on Tuesday, its highest since April 25.

The dollar index was at 104.6, while most Asian currencies declined with the Korean won down 0.7% and leading losses. US bond yields ticked higher with the two-year Treasury yield inching higher to 4.84%.

“In the near term, the rupee may encounter resistance at 83.20 and find support at 83.60,” said Dilip Parmar, a foreign exchange research analyst at HDFC Securities.

Meanwhile, dollar-rupee forward premiums slipped, with the 1-year implied yield down 1 basis point (bp) at 1.70%, pressured by the uptick in US bond yields.

“Near forwards should stabilise a bit with possible receiving interest in far forwards,” a foreign exchange trader at a private bank said. Meanwhile, Federal Reserve policymakers maintained a cautious stance on inflation in their remarks on Monday.

The remarks come after a softer-than-expected consumer inflation print last week raised investors’ expectations of two rate cuts by the US central bank over 2024.

Indian rupee ends moderately higher

“The issue right now is when are we going to be certain that inflation is clearly on a path back to 2%. I think it’s going to take a while before we know that for sure,” Atlanta Fed President Raphael Bostic said.