MUMBAI, July 17 (Reuters) - The Indian rupee wavered in a narrow range on Monday as Asian currencies pulled back following last week's rally, while U.S. yields rose.
The rupee was at 82.1600 to the U.S. dollar by 10:38 a.m. IST, barely changed from 82.1650 on Friday. The local currency had nudged higher at the open and briefly dropped to near 82.20, a level considered a support by traders.
"82.20-82.30 will see a round of offers (on USD/INR) and should mostly hold for the time being," a fx trader said.
Asian currencies began the week on the defensive in wake of an uptick in U.S. yields and weak China data.
U.S. yields rose off two-week lows on Friday after consumers lifted their inflation expectations in July. The University of Michigan's preliminary reading of one-year inflation expectations inched up to 3.4% this month from 3.3% in June and the half decade inflation outlook nudged up to 3.1% from 3.0% in the prior month.
"It's difficult to put any comforting spin on the lift in U.S. household 1-year-ahead inflation expectations... when the consensus had been for a fall," ANZ said in a note.
The offshore Chinese yuan dropped top 7.18 to the dollar after GDP data reinforced recent signs of a broad loss in economic momentum. On a year-on-year basis, China's GDP expanded 6.3% in the second quarter, well below the 7.3% forecast.
Asian currencies had rallied last week on optimism over the U.S. inflation outlook and expectations that the Federal Reserve is near to halting its rate hike cycle.
Tracking the higher U.S. yields, rupee forward premiums dropped. The 1-year implied dropped three basis points to 1.69%. (Reporting by Nimesh Vora; Editing by Nivedita Bhattacharjee)
