Market News

By Jaspreet Kalra

MUMBAI (Reuters) - The Indian rupee closed slightly weaker on Wednesday, weighed down by month-end importer dollar demand, while gains in local equities and a revival in risk appetite after a fragile truce between Iran and Israel cushioned the pressure.

The rupee closed at 86.0775 against the U.S. dollar, down 0.1% from its close of 85.9750 in the previous session.

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The currency touched a peak of 85.8075 earlier in the day but reversed course on the back of corporate dollar demand, traders said.

Slight weakness in the offshore Chinese yuan was also a dampener for the rupee, a trader at a private bank said.

Risk sentiment remained upbeat with most Asian stocks logging gains after the truce between Iran and Israel appeared to hold.

The Iran-Israel ceasefire is going well, U.S. President Donald Trump said on Wednesday. Each side claimed victory on Tuesday after 12 days of war, which the U.S. joined with airstrikes in support of Israel to take out Iran's uranium enrichment facilities.

The dollar index was up 0.1% at 98.1 while Asian currencies were trading mixed. Brent crude oil futures rose about 1% to $67.8 per barrel. [USD/] [O/R]

"We believe that the negative impact of the reduced geopolitical risk on the dollar has largely played out," ING Bank said in a note.

The dollar could see some stabilisation at these levels but risks remain tilted to the downside, the bank added.

Meanwhile, dollar-rupee forward premiums ticked up on the back of the Indian central bank's announcement of a measure to withdraw excess banking system liquidity that lifted near forwards, with the impact spilling over to far tenors as well.

The 1-year dollar rupee implied yield rose 7 bps to 1.96%.

(Reporting by Jaspreet Kalra; Editing by Eileen Soreng)