The Indian rupee is expected to open lower on Wednesday after US economic data lifted US bond yields, prompting the dollar to resume its upward trend. The one-month non-deliverable futures contract indicates that the rupee will open at 85.80-85.81 to the US dollar, up from 85.7125 in the previous session.
The Dollar Index fell in Asian trading to 108.5 after rising 0.3 percent on Tuesday, following data showing U.S. job openings rose to 8.098 million, beating forecasts. an increase of 7.7 million, while activity in the services sector also accelerated.
The greenback hit its lowest level in a week on Monday as traders weighed whether President-elect Donald Trump’s tariff policies would match his aggressive rhetoric.
The data, along with a $39 billion supply of 10-year U.S. bonds, prompted the 10-year Treasury yield to rise about 8 basis points to 4.69%, its highest level. high since April last year.
Continued strength in the US dollar, concerns over India’s slowing economic growth and tepid capital flows have weighed on the rupee in recent weeks.
Foreign investors have sold nearly $2 billion worth of Indian stocks and bonds in January so far, as India set its annual growth forecast for the year ending in March to 6.4%, the slowest pace in four years, according to data released Tuesday.
“Juxtaposing less favorable global catalysts (rolling yuan included) and domestic drivers, we expect the rupee to lose ground this quarter,” DBS Bank said in a note.
“Rupee traders are eager to gauge the new RBI (Reserve Bank of India) governor’s views on the currency since he took office last month. Recent price action of the INR indicates greater tolerance for a weaker exchange rate,” the bank said.
Asian currencies were generally weaker on Wednesday, with the Chinese offshore yuan trading lower at 7.34.
KEY INDICATORS:
** One-month rupee non-deliverable at 86.05; one-month onshore forward premium at 24.5 paise.
** Dollar Index down 0.1% to 108.58
** Brent up 0.3% to $77.3 per barrel
** Ten-year US bond yield at 4.68%.
** According to NSDL data, foreign investors sold $356 million worth of Indian stocks on January 6.
** According to NSDL data, foreign investors sold $56.6 million worth of Indian bonds on January 6.
