Trump’s Fed backlash undermines dollar, primes Indian rupee for higher open

MUMBAI: The Indian rupee is set to open higher on Thursday, boosted by the dollar’s tumble to multi-year lows after U.S. President Trump renewed his criticism of Federal Reserve Chair Jerome Powell and reportedly floated plans of his early replacement.

The 1-month non-deliverable forward indicated a open in the 85.96 to 85.98 range, versus 86.0775 in the previous session.

The rupee rose above the 86 level in the last two sessions, but failed to sustain those moves. It touched an intraday high of 85.80 on Wednesday.

The dollar/rupee pair “looks well supported at the 85.80–86 zone, and import demand tends to show up there, so downside will be sticky”, a currency trader at a bank said, while pointing out that the 21-day moving average is at 85.90.

Unless the USD/INR pair decisively breaks below the 85.80–85.90 region on flows, it will likely stay rangebound with broad dollar cues “largely immaterial”, he said.

Indian rupee to hold above 86 as safe haven premium in dollar erodes

Dollar slides, Asia climbs

The dollar index dipped in Asia, heading for its sixth straight daily decline. The euro, which has the highest weightage in the dollar index, hit a multi-year high against the dollar, boosted by NATO developments.

Concerns about the future independence of the U.S. Federal Reserve weighed on the dollar.

According to a Wall Street Journal report, Trump had toyed with the idea of selecting and announcing Fed Chair Powell’s replacement by September or October.

Trump on Wednesday called Powell “terrible” for not lowering interest rates sharply, while the Fed chair was telling the Senate that policy had to be cautious with the President’s tariff plans posing a risk to inflation.

The Korean won and the Taiwanese dollar led Asian currencies higher.