The Indian rupee is expected to rise at the open on Wednesday, following a rise in most of its Asian peers, after which it is expected to face demand for US dollars from importers and speculators.
The one-month non-deliverable futures contract indicates that the rupee will open at 86.50-86.52 per dollar, compared to its close of 86.5775 in the previous session.
Most Asian currencies were up against the greenback, extending the previous day’s advance. In the wake of Donald Trump’s inauguration as US President, the Dollar Index has been choppy, while Asian currencies have rallied.
The rupee, on Tuesday, managed to rise above 86.30 in early trade, helped by Asian indices, before slipping.
It is “ample evident from yesterday’s session” that “people are eager to buy dips (on the dollar/rupee pair)”, said a bank forex trader.
“Chances are we have a similar session today, with good support (for the dollar/rupee) on the pullbacks.
The direction of Asian currencies largely depends on what Trump does on tariffs. He did not immediately impose tariffs when he took office on Monday, a relief for Asia.
This might not last. On Tuesday, Mr. Trump vowed to hit the European Union with tariffs and said his administration was discussing a punitive 10% tariff on Chinese imports. The Chinese offshore yuan fell to 7.2850 per dollar.
“You can be sure that big changes are coming when it comes to U.S. trade, even though we didn’t have any new tariffs on President Trump’s first day in office,” ING bank said in a statement. note.
FOREIGN CAPITAL OUTFLOWS, COVERAGE
-Outflows from Indian stocks, as well as growing interest in hedging, weighed on the rupee, in addition to tariff uncertainty.
Foreigners have withdrawn $6 billion from Indian stocks since the start of the month, according to data from securities depository NSDL.
KEY INDICATORS:
** One-month non-deliverable rupee forward exchange rate at 86.80; one-month onshore forward premium at 23.5 paisa.
** Dollar Index down to 108.07
** Brent at $79.3 per barrel; drop of 1% on Tuesday and fourth consecutive daily drop.
** The yield on ten-year US bonds is 4.59%.
** According to NSDL data, foreign investors sold $430.4 million worth of Indian stocks on January 20.
** According to NSDL data, foreign investors purchased $13.3 million worth of Indian bonds on January 20.
