MUMBAI: The Indian rupee is tipped to open higher against the US currency on Tuesday as a slide in U.K. yields boosted risk appetite and hurt demand for the safe-haven dollar.
The rupee is expected to open at around 82.20-82.25 per dollar, up from 82.35 in the previous session, when it traded in a roughly six-paisa range.
“We reckon that after the opening dip (on USD/INR), we will probably have another quiet session, like yesterday, or the dollar drifts higher back to the 82.40 level,” a trader at a Mumbai-based bank said.
The chances of the rupee adding to its opening advance “are quite low” given the likelihood of decent dollar buy orders at around 82.10-82.15, the dealer said.
The rupee in recent sessions has repeatedly struggled to breach that level.
The dollar index plunged 1% on Monday to just above the 112 level.
The gauge’s slide came alongside a 2.7% rally in US equities, with the fall in U.K. yields boosting demand for risk assets.
The U.K. 30-year bond yield plunged around 44 basis points to 4.335% after Britain’s new finance minister Jeremy Hunt scrapped Prime Minister Liz Truss’s proposed tax cuts and reined in her energy subsidies.
Hunt’s reversal came after a dramatic loss of investor confidence in U.K. assets.
Despite the overnight decline in the dollar index and the risk-on sentiment, Asian currencies were mostly either flat or lower.
The measured response of US bonds to the fall in U.K. bonds likely impacted demand for Asian currencies.
The 10-year Treasury yield was hovering just around 4% and the 2-year was at 4.44%.
Meanwhile, in its monthly bulletin published on Monday, the Reserve Bank of India said retail inflation is set to ease from September levels, while economic activity is poised to expand.
Comments
Comments are closed.