MUMBAI: The Indian rupee is expected to open little changed on Tuesday, defying the dollar’s advance against major peers and Asian currencies, with traders noting the local unit has managed to pause its recent weakening trend.
The 1-month non-deliverable forward indicated the rupee will likely open largely unchanged to the U.S. dollar, from 87.35 on Monday.
The rupee, which came near slipping past its all-time low of 87.95 two weeks ago, has since managed to crawl back up.
Support has come from the Reserve Bank of India’s resolve to prevent the local currency from touching another record low, unwinding of long dollar positions, and more recently, India’s planned tax cuts and cautious optimism around the Ukraine-Russia conflict.
The rupee inched higher last week, posting its first weekly advance in over a month, and inched up 0.2% on Monday.
The rupee’s slide “has been checked for now” and the “bias is now more neutral”, a currency trader at a Mumbai-based bank said.
“Near term, it should stay in a tight range unless fresh triggers emerge from the U.S. tariff headlines.”
Dolalr climbs
The dollar index rose on Monday and inched up slightly on Tuesday while Asian currencies dipped. Investors weighed signs of progress toward halting the Russia-Ukraine conflict and awaited Federal Reserve Chair Jerome Powell’s speech at Jackson Hole on Friday.
Ukrainian President Volodymyr Zelenskiy said security guarantees for his country could be finalised within 10 days following talks with U.S. President Donald Trump and European leaders.
A peace deal between Russia and Ukraine would boost overall risk appetite, a positive for the rupee. It could benefit the currency more directly by reducing the likelihood that the U.S. would proceed with additional tariffs on India for purchases of Russian oil, which are scheduled to take effect on August 27.
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