MUMBAI, Sept 29 (Reuters) - The Indian rupee strengthened on Friday, aided by softening in the dollar index and quarter-end sales of the U.S. currency from exporters.
The rupee was at 83.0675 against the U.S. dollar as of 10:55 a.m. IST compared with a close of 83.1850 in the previous session. The dollar index was lower at 106.01, easing off its recent near-10-month high of 106.84 hit earlier this week.
Asian currencies were mixed with the Thai baht weaker and the Malaysian ringgit leading gains up by 0.4%.
U.S. dollar sales from exporters will also support the rupee, a foreign exchange trader at a state-run bank said, adding that a continued dip-buying bias on the USD/INR is likely to limit potential upside keeping the rupee range-bound.
The 10-year U.S. treasury yield little changed in Asia at 4.59% but off its highest level in 16 years of 4.68% hit on Thursday.
Brent crude futures also eased off their recent highs and last quoted lower at $95.05.
While India fell short of inclusion in FTSE Russell's emerging market government bond index, the rupee is unlikely to react much to the news, traders said.
Indian government bonds took the news in their stride with the benchmark 7.18% 2033 bond yield easing three basis points to 7.2126%.
In the near term, the rupee "is stuck in a range", said Dilip Parmar, a foreign exchange research analyst at HDFC Securities, adding that 83.25 will continue to be a key support level for the domestic currency.
Investors will keep an eye on U.S. core personal consumption expenditure (PCE) inflation data, the Federal Reserve's preferred inflation gauge, for August due later in the day.
A looming potential shutdown of the U.S. government could also impact financial markets globally. "As a stand-alone issue, this should place downward pressure on Treasury yields," ING Bank stated in a note. (Reporting by Jaspreet Kalra; Editing by Sohini Goswami)
