MUMBAI: The Indian rupee will be looking to rise further versus the US dollar on Tuesday, on back of rise in Asian currencies and positive risk mood.
Non-deliverable forwards indicate rupee will open little changed or slightly higher the dollar, having reached a three-week high of 81.8150 on Monday on equity inflows.
Offshore was indicating a quiet open, but USD/INR short positions will be counting on the favourable momentum to take pair below the next support of 81.75, a spot trader at a bank said.
“If RBI (Reserve Bank of India) keeps away, we see a decent chance of a breakdown.”
Asian currencies rose, with the offshore Chinese yuan leading the way while the dollar index inched lower to near 101.30. Investors await the result of the two-day US Federal Reserve meeting, due on Wednesday.
Ahead of the Fed decision, data indicated that the US economy was still growing as the third quarter began, but at a slower rate from the April-June period.
Indian rupee likely to fall to start off important week
S&P Global said its flash US Composite PMI index, which tracks manufacturing and service sectors, fell to a reading of 52 in July from 53.2 in June.
The reading showed a sixth straight month of growth, but restrained by softening conditions in the service sector.
The data reinforced expectations that the near-certain rate hike by the US central bank this week would be the last of the current cycle.
Attention is firmly fixed on the Fed meeting, ANZ said in a note.
The flash PMI data are consistent with the Fed pausing rate hikes after raising it by 25 basis points this week, it said.
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