The Indian rupee may post slight gains on Monday, helped by a decline in the US dollar and portfolio inflows due to rebalancing in MSCI global stock indices.
The one-month non-deliverable futures contract indicates that the rupee will open at 84.38-84.39 against the US dollar from 84.4450 in the previous session.
The rupee hit an all-time low of 84.5075 on Friday, pressured by likely dollar outflows and continued strength in the greenback, but avoided deeper losses thanks to Reserve Bank intervention of India.
The dollar index hit a two-year high on Friday but fell 0.5% at market open Monday to 106.9 after US President-elect Donald Trump said he would nominate Scott Bessent as US Treasury Secretary. [USD/]
Some analysts say Mr. Bessent's appointment could reduce the risk of high tariffs, potentially limiting the inflationary impact of Mr. Trump's policies.
“The market's view that Bessent is a 'safe' candidate could lead to a rally in Treasuries from the open on Monday, with the risk of a less orthodox candidate ruled out,” Societe Generale analysts said in a note.
Meanwhile, MSCI's global stock index rebalancing takes effect after markets close Monday and is expected to attract $2.5 billion in passive investments, according to estimates from Nuvama Alternative & Quantitative Research.
Expectations of capital inflows, an overall weaker dollar and the RBI's tough defense are supporting the rupee, but demand for dollars could keep gains superficial, a trader at a state bank said.
On Friday, as the rupee weakened below the psychologically important 84.50 mark, the RBI asked some banks to reduce their speculative positions against the rupee and asked lenders to avoid buying spot dollars for execute arbitrage transactions.
KEY INDICATORS:
** One-month non-deliverable rupee futures contract at 84.50; one-month forward premium in the domestic market at 12 paisa.
** Dollar index at 106.8
** Brent down 0.2% to $75 per barrel
**The yield on US ten-year bonds is 4.35%.
** According to NSDL data, foreign investors bought $157 million worth of Indian stocks on November 21.
** According to NSDL data, foreign investors sold $1.7 million worth of Indian bonds on November 21.
