MUMBAI: The Indian currency is expected to inch higher at the open on Thursday, ignoring the weakness in its Asian peers and the uptick in US Treasury yields.
Non-deliverable forwards indicate the rupee will open at 83.46-83.48 to the US dollar, compared with its close of 83.5175 in the previous session.
“There is nothing much here. A slightly softer opening (for USD/INR), if it does materialize, will not change the directionless mode we are in,” an FX trader at a bank said.
“The balance of risks is absolutely balanced and totally depends on the way RBI (Reserve Bank of India) wants it.”
The rupee has been holding a narrow range around 83.50 the last two sessions on repeated offers by public sector banks, which traders say may be on behalf of the central bank.
The RBI is possibly intervening in the wake of dollar demand from oil companies, a lack of portfolio inflows and the usual daily flows.
Asian currencies were mostly lower and US Treasury yields tracked higher.
The dearth of US data this week has meant that expectations on the Federal Reserve interest rate front have barely budged. Investors have currently priced in two rate cuts this year, kicking off in September.
Indian rupee ends little changed
That could change next week with the US consumer inflation data due on Wednesday.
While the last three inflation readings have surprised on the upside, the Fed was less hawkish than expected last week. Meanwhile, the Bank of England will decide on its monetary policy later in the day.
“While no cut is seen, the market could be looking for a more dovish lean following the Fed’s example,” ING Bank said in a note.
With a June cut still on the table, the forward guidance will be scrutinised, it said.
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