The Indian rupee is expected to open near a lifetime low on Thursday and could fall further during the session, fueled by bets that Donald Trump's US presidency will usher in a period of dollar strengthening and rising currencies. American interest rates.
The one-month non-deliverable futures contract indicates that the rupee will open near its close and all-time low of 84.28 in the previous session.
“It's quite obvious that the risks (on dollar/rupee) will be on the upside at the moment. When you think about the levels, it's obvious that the next one is 84.50,” said a forex trader at a bank.
“I think the question now is how adamant the RBI (Reserve Bank of India) will be in its defense (of the rupee) in the face of the magnitude of the dollar's rise.
The rupee suffered its worst day in 4 1/2 months on Wednesday, reflecting the fall of other Asian currencies amid uncertainty over the consequences of a Trump presidency.
The renewed threat of tariffs after Trump's victory prompted investors to dump the Chinese yuan and other Asian currencies.
The offshore yuan plunged 1.4% on Wednesday, the biggest decline in half a decade. The same was true for most Asian currencies: the Thai baht lost 2% and the Korean won 1.7%.
The rupee's losses during the session would have been greater without the RBI's intervention. It was not the only central bank to remain vigilant.
Indonesia's central bank has prepared mitigation measures to stabilize the rupiah, including intervention in the foreign exchange market in the event of excessive volatility. China's state-owned banks sold dollars to support the yuan.
FED RATE CUT
The Federal Reserve is expected to cut rates by 25 basis points just after midnight India time, and most analysts say the central bank's ability to make many more rate cuts has been limited by the victory of Trump.
KEY INDICATORS:
** One-month non-deliverable rupee forward exchange rate at 84.38; one month onshore forward premium at 10.50 paisa.
** Dollar index down to 105.04
** Brent up 0.9% to $75.6 per barrel
** Ten-year US bond yield at 4.43%.
** According to NSDL data, foreign investors sold $206.7 million worth of Indian stocks on November 5.
** According to NSDL data, foreign investors bought $123.5 million worth of Indian bonds on November 6.
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