The Indian rupee is expected to open broadly unchanged on Monday, as Asian peers were mixed, with the focus on key US data due later in the week.
Non-deliverable futures indicate that the rupee will open barely changed from the previous session’s close of 83.3825. Asian currencies remained range-bound and lacked direction, while the dollar index fell.
Last week was a choppy one for the rupee, with the inclusion of Indian bonds in the JPMorgan Emerging Markets Index and the expiry of June futures. The local currency remained in a range of 83.36-83.61.
Foreign investors bought 16.54 billion rupees ($198.4 million) worth of Indian bonds on a net basis under the Fully Accessible Route on Friday, the inclusion day, which is considerably lower than what the bankers had planned.
“Now that the inclusion-related positions are complete, we are returning to tracking the dollar and U.S. yields,” said a bank forex trader.
“Overall, I think we are in the 83.30-83.60 range with higher risks (for the dollar/rupee).”
Key US data is due this week, starting with ISM manufacturing figures later today. ISM services data will be released on Wednesday and June non-farm employment figures will be released on Friday.
Nonfarm payrolls figures, the most closely watched indicator, will provide insight into the health of the U.S. labor market.
Remarks from Federal Reserve Chairman Jerome Powell are expected on Tuesday, followed by minutes from the Fed’s latest monetary policy meeting.
US data will shed light on whether the Fed will cut rates later in the year. Hopes for a September rate cut persisted after the U.S. Personal Consumption Expenditures (PCE) price index stagnated in May.
“The data supports our view that the disinflation process remains in place,” ANZ Bank said in a note.
Fed funds futures are pricing in a 3 in 4 chance of a September rate cut.
KEY INDICATORS: ** Rupee undeliverable in one month at 83.45; One-month onshore forward premium at 6.75 paise ** Dollar index down at 105.62 ** Brent up 0.4% at $85.4 a barrel ** US ten-year bond yield at 4.39% ** According to NSDL data, foreign investors purchased Indian stocks worth a net worth of $929.2 million on June 27.
** According to NSDL data, foreign investors bought $113.3 million worth of Indian bonds on June 27.
