MUMBAI: The Indian rupee is expected to open lower on Wednesday on the back of a decline in Asian currencies and weak risk appetite after rating agency Fitch cut the US credit rating.
Non-deliverable forwards indicate rupee will open at around 82.32-82.34 to the US dollar compared with 82.2550 in the previous session. “Let’s see if today’s session is any different from yesterday’s and if there is a follow up to the opening move higher (on USD/INR),” a forex trader at a bank said.
The rupee on Tuesday had declined at the opening, but ran into support at 82.30-82.35. US equity futures and Asian shares dropped on Wednesday after Fitch downgraded the US long-term foreign currency ratings to AA+ from AAA, reflecting likely fiscal deterioration over the next three years and repeated down-the-wire debt ceiling negotiations.
Asian currencies dropped while the dollar index rose to 102.16. The 10-year US yield inched lower in the Asia session. “The Fitch downgrade should have minimal negative impact on the allure of US Treasuries,” DBS Research said in a note.
“High inflation and growth remain the key triggers for bond demand.”
In the data out on Tuesday, a report suggested US manufacturing might be stabilising at weaker levels in July amid an improvement in new orders, though factory employment dropped to a three-year low.
US private payrolls data is due later in the day. A report on how the US non-manufacturing sector is faring is out on Thursday, followed by the non-farm payrolls report on Friday.
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