MUMBAI, April 6 (Reuters) - The Indian rupee was on the stronger side of 82 per U.S. dollar with mild gains on Thursday ahead of the Reserve Bank of India's monetary policy decision.
The rupee traded at 81.9075 per dollar by 9:27 a.m. IST, compared to its previous close of 82. It firmed to a three-week high on Wednesday on the back of foreign banks' dollar sales, likely for their custodial clients, traders said.
The currency has room to gain further, supported by improving inflows and macroeconomic fundamentals, so a 25 basis point (bps) hike by the RBI could provide the impetus, said a private bank forex dealer.
The next resistance lies near 81.80-81.85, the trader added.
At around 10:00 a.m. IST, the RBI is expected to raise rates by 25 bps to 6.75% amid elevated core inflation and leave the door open for more increases.
"All eyes will be on the forward guidance – whether the RBI will opt to change the stance or soften the current stance of 'withdrawal of accommodation'," said Gaura Sen Gupta, economist at IDFC FIRST Bank.
Indian equities have risen for the past four trading sessions, with foreign investors being net buyers of about $975 million worth of shares.
Meanwhile, Asian currencies were weaker despite another round of data that indicated that the Federal Reserve may prefer to hit a pause on its rate hike cycle.
The U.S. services sector slowed more than expected in March and U.S. private employers hired fewer workers than expected in March.
The dollar index reached a low of 101.40 overnight, the lowest in two months, and U.S. yields declined. (Reporting by Anushka Trivedi and Nimesh Vora; Editing by Savio D'Souza)
