MUMBAI: The Indian rupee is poised to open little changed to the dollar on Thursday in the wake of a further rise in US yields and tepid risk appetite. The non-deliverable forward (NDF) indicates the rupee will open barely changed from the previous session’s 82.50 closing.
The rupee over last two sessions rose 0.4%. While NDF indicates a quiet opening, it may not be a surprise if the rupee opens lower, a trader at a Mumbai-based bank said. The USD/INR is near its perceived near-term range while the US Federal Reserve’s terminal rate pricing inched higher, the trader highlighted.
The 2-year US Treasury yield, a good proxy to the Fed policy, rose to 4.92% in Asia trading, the highest level since 2007. The expectations regarding the peak Fed rate climbed to 5.48% and the probability that the US central bank could opt for a 50 basis points rate hike in March reached near to 1-in-3.
The 10-year US yield climbed to 4%, a multi-year high.
Data out of Europe on Wednesday alongside the prices paid component of the US ISM manufacturing data, continued to fuel concerns that interest rates could keep climbing for longer than anticipated.
German inflation accelerated in February, while the ISM survey’s measure of prices paid by manufacturers rose to 51.3 in February from 44.5 in January. The ISM price paid index had moved above the 50 level for the first time since September, DBS Group Research pointed out.
Indian rupee poised to open higher on Chinese yuan boost; eyes 82.50/$ level
“Given the concern that US disinflation might be losing momentum, markets are wary that prices paid may rise in the ISM services survey tomorrow,” DBS said in a note.
Overnight, Minneapolis Fed President Neel Kashkari said he was inclined “to push up” his policy path after a recent inflation report missed the Fed’s target.
Asian currencies were mostly lower while US equity futures extended losses.
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