MUMBAI: The Indian rupee is expected to open little changed on Tuesday amid a mostly weaker dollar and expectations that the Reserve Bank of India may step in. Non-deliverable forwards indicate the rupee will open barely changed from 82.04 in the previous session.
With the RBI “at least on the face of it” capping the downside (on USD/INR) at 81.80-81.85 and the dollar struggling overall, expect a range of 20 paisa on either side of 82, a foreign exchange trader said.
The USD/INR implied volatility will remain “depressed”, the trader added.
Over the last two weeks, the RBI has been regularly buying dollars via pubic sector banks when the rupee strengthened to the 81.80-81.90 level, according to market participants.
The rupee, on a number of occasions this month, has not been able to sustain a move above 82.
The dollar index was hovering not too far from an over one-year low on bets that the US Federal Reserve is nearing the end to its rate-hiking cycle.
Indian rupee to rise tracking further dollar losses on Fed outlook
The Fed is expected to raise rates one last time next week, followed by a long pause.
US retail sales and industrial output data is due Tuesday.
The data “will provide the committee with fresh insight on demand and output for the cyclically sensitive goods and manufacturing sectors”, ANZ said in a note.
Asian currencies were higher during the day, while equities were mostly lower despite the positive session for their US peers.
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