MUMBAI, May 8 (Reuters) - The Indian rupee rose on Monday, helped by dollar offers of foreign banks that, traders said, were likely for their custodial clients.
The rupee was quoted at 81.8175 per U.S. dollar by 10:34 a.m. IST, up from 81.80 in the previous session.
"Once again, we are seeing decent sized (dollar) selling from foreign banks, which ties to the recent pickup in equity inflows," a spot trader said.
It's "fairly straightforward" to deduce that the USD/INR risks a larger fall only if its drops below 81.60, the trader said.
The rupee was helped by the upbeat risk appetite following the monthly U.S. jobs report on Friday, which, to an extent, alleviated concerns over the economy.
The report showed the U.S. economy added 253,000 jobs in April, while the unemployment rate unexpectedly declined to an over-50-year low of 3.4%.
Economists polled by Reuters had expected 180,000 job additions and an unemployment rate of 3.6%. Wages grew by 0.5% against a 0.3% forecast from the economists.
U.S. equities surged, while Treasury yields rose following the data. That pulled rupee forward premiums lower, with the 1-year falling to 2.20%.
The focus now shifts to U.S. inflation data due Wednesday, with economists expecting a 0.4% month-on-month increase in the core inflation rate.
The data will draw scrutiny in the wake of increasing confidence that the Federal Reserve will opt to pause its rate hikes at its meeting in June.
In the backdrop of the U.S. payroll data, a higher-than-expected inflation reading would be disruptive to the risk appetite and rate expectations, said Srinivas Puni, managing director at QuantArt Market Solutions.
"If inflation is broadly in line, one might expect a longer period of meandering currencies and the rupee." (Reporting by Nimesh Vora; Editing by Savio D'Souza)
