MUMBAI: The Indian rupee’s winning run is likely to halt on Tuesday, pressured by a drop in Asian currencies stoked by the Chinese yuan and the local currency’s failure to breach a key resistance level.
The 1-month non-deliverable forward indicated that the rupee will open at 85.22-85.24 to the U.S. dollar, compared with its previous close of 85.1275.
The rupee failed to break past the psychological 85 mark on Monday.
The 200-day moving average, currently lodged in the 84.90-85.00 zone, proved to be a resistance level, which did not surprise most market participants.
A currency trader at a leading private bank noted that the rupee’s inability to conquer the 85 threshold “is an issue,” especially considering the broader weakness across Asian currencies.
One of the main drags on the region was the onshore Chinese yuan, which weakened to near 7.31 per dollar.
The People’s Bank of China set the official mid-point at 7.2075, compared to 7.2055 on Monday, despite the dollar index’s slump to a three-year low.
The dollar continued its slide against major peers, pressured by President Donald Trump’s criticism of Federal Reserve Chair Jerome Powell and confrontational trade policies.
Investor confidence in U.S. assets has wavered amid concerns over the Fed’s independence and the toll Trump’s tariffs could exact on the U.S. economy.
The unease was visible across asset classes on Monday. U.S. equities tumbled, while Treasuries declined.
“Conviction levels are high that exceptional U.S. growth has been eroded and that the dollar needs to come lower,” ING Bank said in a note, adding that April is shaping up to be a pivotal month for the currency.
The dollar index is down a substantial 5.7% this month, on track for its sharpest monthly drop in at least a decade.
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