By Nimesh Vora
MUMBAI, Dec 15 (Reuters) – The Indian rupee is expected to open lower against the dollar on Thursday after U.S. Federal Reserve policymakers projected that rates would rise more than what markets have priced in.
The rupee is tipped at around 82.55-82.60 per U.S. dollar at the open, compared with 82.46 in the previous session.
Near-maturity Treasury yields rose and U.S. equities fell overnight after the Fed’s median dot plot showed a funds rate midpoint of 5.125% at the end of 2023, up from 4.625% in September and higher than what markets had priced in.
The Fed raised rates by 50 basis points on Wednesday, as was widely expected, and its statement retained a reference to “ongoing increases” in the Fed funds rate as appropriate, which economists reckon means multiple further rate hikes are likely.
“Two consecutive undershoots of (U.S.) inflation have led the market to believe we are getting very close to the peak for interest rates, and rate cuts will soon be on the agenda,” ING Bank said in a note.
“The Fed clearly isn’t willing to make that call.”
Asian currencies were down between 0.3% and 0.7%, and the dollar index was marginally higher.
On the back of the Asian cues and higher oil prices, the rupee should be on the defensive at the open, but remains “well protected” near the 82.75 levels, a trader at a Mumbai-based bank said.
Oil prices rose for the third straight day on Wednesday. Brent crude is up almost 8% this week.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 82.68; onshore one-month forward premium at 12.75 paise
** USD/INR NSE Dec futures settled at 82.5475 on Wednesday
** USD/INR Dec forward premium at 5.0 paise
** Dollar index up at 103.84
** Brent crude futures at $82.1 per barrel
** Ten-year U.S. note yield at 3.51%
** SGX Nifty nearest-month futures down 0.4% at 18,681
** As per NSDL data, foreign investors bought a net $80.8 million worth of Indian shares on Dec. 14
** NSDL data shows foreign investors sold a net $471.1 million worth of Indian bonds on Dec. 14 (Reporting by Nimesh Vora; Editing by Savio D’Souza)
