A man counts Indian currency notes inside a shop in Mumbai, India, August 13, 2018. REUTERS/Francis Mascarenhas/File Photo Acquire Licensing Rights
MUMBAI, Nov 9 (Reuters) – The Indian rupee is expected to open slightly higher on Thursday after demand worries prompted a further fall in oil prices and as U.S. yields slid more.
Non-deliverable forwards indicate the rupee will open at around 83.24-83.25 to the U.S. dollar, compared with 83.2725 in the previous session.
“Taking into account how it has panned out on other days, this marginal opening dip (in USD/INR) is all we will get,” a forex trader at a bank said.
“What oil prices and U.S. yields are doing is curtailing the upside pressure (in USD/INR), which the RBI (Reserve Bank of India) will be happy about.”
The RBI has repeatedly defended the rupee, not wanting the currency to drop below the 83.30 handle, according to traders.
Brent crude on Wednesday fell below $80 a barrel for the first time since around mid-July on concerns over waning demand in the U.S. and China. Brent is now down nearly 12% since last Monday, a relief for a major oil importer like India.
The 10-year U.S. yield dropped below 4.50%, reaching the lowest in more than a month and is now down more than 50 basis points from its recent high.
The Federal Reserve nearing a pause in its rate hiking cycle and weaker-than-expected U.S. data has prompted investors to lap up Treasuries.
Fed Chair Powell on Wednesday did not comment on monetary policy or economic outlook in prepared remarks. He will be speaking once again on Thursday.
“The takeaway from the Fed Chair is to be more flexible on economic forecasting during times of ‘unpredictable shocks’, but his words clearly fell short of a direct guidance of growth risks for the U.S. economy,” Yeap Jun Rong, market strategist at broker IG Asia, said.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 83.28; onshore one-month forward premium at 4.75 paisa
** Dollar index inches down to 105.50
** Brent crude futures at $79.9 per barrel
** Ten-year U.S. note yield at 4.48%
** As per NSDL data, foreign investors sold a net $37.5mln worth of Indian shares on Nov. 7
** NSDL data shows foreign investors bought a net $179.2mln worth of Indian bonds on Nov. 7
Reporting by Nimesh Vora; Editing by Sonia Cheema
Our Standards: The Thomson Reuters Trust Principles.
