MUMBAI: The Indian rupee, hovering at the lowest level in nearly three months, is unlikely to see much relief following a further rise in US yields. Non-deliverable forwards indicate rupee will open at around 82.84-82.85 to the US dollar, compared with 82.8275 in the previous session.
The local currency has declined in seven of the last eight sessions. On the one hand, USD/INR is at a level where “it would seem” there is limited upside, and on the other hand, “there is little doubt” where the broader direction lies, a trader said.
The 82.95-83.00 level is now “all-important” for USD/INR, the trader said, adding that whether the pair will move above that level will depend on the Reserve Bank of India and to an extent on the forward premiums.
The 2-year US yield inched up in Asia, hovering near its highest level since mid-March. Market participants were watching the progress in US debt ceiling talks and comments by Federal Reserve officials. Fed officials struck a hawkish tone again.
Minneapolis Fed President Neel Kashkari, a voter this year on the Federal Open Market Committee this year, said it was a “close call” whether he would vote to raise interest rates or pause at next month’s meeting.
St. Louis Fed President James Bullard said the US central bank may still need to raise the benchmark interest rate by another half-point this year.
The dollar index inched up in Asia. Most Asian currencies were down with the offshore Chinese yuan slipping to 7.0630 to the dollar.
Indian rupee poised to weaken after central bank pulls 2,000-rupee notes
Markets are cautiously confident of a debt-ceiling deal being reached and that with hawkish hints by Fed officials suggest there could be another repricing higher in US rate expectations and keep the dollar supported a bit longer, ING Bank said.
Comments
Comments are closed.