MUMBAI: The Indian rupee is expected to have a quiet opening on Thursday, following a selloff in US equities and a further drop in US Treasury yields.
Non-deliverable forwards indicate the rupee will open nearly unchanged from the previous session’s closing of 83.17.
The S&P 500 Index had its worst session in nearly three months, while the 10-year US Treasury yield dropped to the lowest since late-July.
The “risk off episode has not pulled up the dollar much” and with Asian currencies “mostly quiet”, rupee “will not do anything at open”, a foreign exchange (FX) trader at a bank said.
“The near-term direction has a slight upside bias, but there is honestly nothing here.”
The plunge in US equities came despite positive news flow in the form of US consumer confidence and existing homes sales.
US existing home sales unexpectedly rose in November, and in December consumer confidence improved.
The decline in US equities is attributed to an “overbought market,” Tina Teng, market analyst at CMC Markets, said.
The S&P 500 Index had rallied nearly 14% since November, nearing its all-time high.
Despite positive data, US yields declined, which analysts attributed to safe haven demand and drop in inflation to its lowest rate in over two years in November. Investors increased their bets of a rate cut by the US Federal Reserve at the March meeting.
The odds of a rate cut at the March meeting are around 80%, according to the CME FedWatch Tool.
“Would need to see the follow through to yesterday’s price action, but I think there are initial signs that investors are worried about growth outlook,” the FX trader said.
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