MUMBAI: The Indian rupee is likely to open lower against the dollar on Monday, tracking losses in Asian currencies and shares on concerns over the US interest rate outlook. The non-deliverable forwards indicated an opening of around 82.60-82.64 for the rupee to the US dollar, compared with 82.4975 in the previous session.
The rupee last week recorded its worst performance in almost two months, weighed by the rise in US yields and the dollar index.
The December US jobs report has prompted investors to reassess terminal rate expectations and the quantum of rate cuts the Fed will deliver later this year, lifting US yields and the dollar.
Futures are now pricing in a peak rate of 5.18% and about 25 basis points (bps) of rate cuts this year.
Before the US jobs report, the peak rate was about 25 bps lower and around 50 bps of rate cuts were expected. Comments by Fed officials that more rate hikes were needed have contributed to the change in the US rate outlook.
On the back of this repricing, the US consumer inflation data due on Tuesday will draw more than the usual scrutiny.
Economists polled by Reuters expect both the annual headline and core inflation rate to soften. “US CPI (consumer price index) is the real risk event,” ING Bank said in a note.
Indian rupee eyes RBI policy decision, weighs Powell’s comments
We suspect key dollar crosses will stay rangebound until we see the inflation data, ING added. Unless there is a big surprise in US inflation data, the rupee should hold the 82.40-82.90 range, a trader at a Mumbai-based bank said.
The dollar index opened the week on a quiet note, while Asian currencies extended losses.
The offshore Chinese yuan declined to nearly 6.84 to the dollar.
Also due later in the day is the India inflation data.
The inflation rate is forecast to have risen to 5.9% in January from 5.72% in December.
Comments
Comments are closed.