MUMBAI: The Indian rupee is expected to open higher on Thursday tracking a rally in yuan after China’s central bank took measures to support the currency.
Non-deliverable forwards indicate rupee will open at around 82.00-82.02 to the US dollar compared with 82.0925 in the previous session.
The yuan-led move higher on Asia FX will boost the rupee, but “in all probability” 81.85-81.90 will continue to hold, a currency trader at a bank said.
The rupee has held a narrow range, hovering near the 82 handle, on possible dollar purchases by the Reserve Bank of India and robust equity flows.
The offshore yuan jumped 0.7% to near 7.18 to the dollar, boosted by the daily fix and step taken by the People’s Bank of China to make it easier for domestic firms to raise funds from overseas.
China’s central bank and foreign exchange regulator said on Thursday that they raised the cross-border macro-prudential adjustment ratio.
Meanwhile, the yuan mid-point was set at 7.1466 against the 7.2233 estimated, a sign that the central bank wants to keep a check on the currency’s depreciation.
Indian rupee to track yuan’s slide at open, eyes 82.20/USD
The dollar index dropped to near 100 after the yuan rose.
The Thai baht climbed 0.8% and the Korean won was up 0.3%. The US Federal Reserve’s policy review next week is seen as the next trigger for the dollar.
With a rate hike fully priced in, how expectations shape up for September and November meeting will be key for the dollar.
Recent US activity data “seemingly supports the narrative of the Fed hiking rates again in July, but pausing again in September, perhaps for a number of months,” ING Bank said in a note.
US jobless claims data is due Thursday, providing cues on the strength of the labour market.
Comments
Comments are closed for this article.