MUMBAI, Aug 30 (Reuters) - The Indian rupee gained slightly on Friday on the back of inflows into local stocks but importers' dollar demand limited the gains.

The rupee was at 83.84 against the U.S. dollar as of 10:25 a.m. IST, against its close at 83.87 in the previous session.

Despite expectations of inflows related to India's increased weight in MSCI's emerging market equity index, the rupee was unable to gain substantially in the face of "strong dollar demand" from local importers, a foreign exchange trader at a state-run bank said.

The higher weightage for Indian equities, effective on Friday, is expected to draw up to $3 billion of inflows, according to Nuvama Alternative and Quantitative Research.

Benchmark Indian equity indexes, the BSE Sensex (.BSESN) , opens new tab and Nifty 50 (.NSEI) , opens new tab, touched record highs in early trading and were last up about 0.2% each.

The rupee is "likely to trade within a range of 83.75 to 83.90" on the day with a bias towards slight appreciation, Amit Pabari, managing director at FX advisory firm CR Forex, said.

The dollar index was little changed at 101.3 while most Asian currencies slipped, save for the offshore Chinese yuan, which was up 0.2% at 7.08, its strongest level since June 2023.

Meanwhile, dollar-rupee forward premiums slipped, pressured by an uptick in U.S. bond yields after data released on Thursday quelled concerns about an economic slowdown.

The 1-year implied yield was down 2 basis points to 2.14%.

U.S. PCE inflation due later on Friday and labour market data due next week are likely to be the key drivers of U.S. rate cut expectations ahead of the Federal Reserve's September meeting.

India's GDP data for the April-June quarter will also be released after market hours and is expected to show that economic growth eased to its slowest pace in a year, according to a Reuters poll.

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https://www.reuters.com/markets/currencies/rupee-rises-equity-inflows-importers-dollar-bids-cap-gains-2024-08-30/