 "Rupee up briefly, searches for direction around familiar resistance level")
By Nimesh Vora
MUMBAI (Reuters) - The Indian rupee briefly rose against the dollar above a level that's being closely watched by traders, but was unable to pierce it convincingly.
The rupee was trading at 81.25 per U.S. dollar by 10:32 a.m. IST compared with 81.36 in the previous session. The local currency reached an intraday high of 81.13.
Speculators were likely encouraged by the move below 81.20 (for USD/INR) after a few failed attempts, said a trader at a private sector bank. However, it looks like there may not be much in the 81.20 breach, but the afternoon could surprise us, they added.
A fall in the Chinese yuan alongside rising oil prices could potentially prevent the rupee from having a go at the 81 level. The offshore yuan declined below 6.79 to the dollar while Brent crude futures rose to near $86.50 a barrel.
The dollar index was slightly higher and near-maturity Treasury yields inched up. The dollar's outlook against its major peers remains challenging on expectations that the U.S. Federal Reserve is almost nearly done with its rate hike cycle.
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The Fed policy decision on Feb. 1 will provide investors with more insights into its thinking on the risks of growth and inflation. The central bank is widely expected to hike rates by 25 bps in February, a further downshift from the 50 bps it opted for at the last meeting.
(Reporting by Nimesh Vora; Editing by Janane Venkatraman)
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