MUMBAI: The Indian rupee is expected to advance on Tuesday in the wake of a pullback in US Treasury yields and the dollar in the lead-up to a slew of key economic data.
Non-deliverable forwards (NDF) indicate rupee will open slightly higher to the US dollar from 82.63 in the previous session. “We think it will be a better opening (for the rupee) than NDF is suggesting,” a forex trader at a bank said.
“Having said that, it will be a very quiet session with an intraday range of less than 10 paisa. After the excitement when we saw 83, it is back to the quiet days.”
The rupee’s recent low was 83.16, from which it has recovered on the intervention by the Reserve Bank of India. The rupee’s Asian peers inched up on Tuesday.
The yield on the US 10-year bond dipped four basis points on Monday and fell further in Asia to 4.18%. The two-year yields dropped below 5%.
The dollar index retreated to below 104. The US currency, however, is likely to take support from indications from Fed Chair Jerome Powell that rates are likely to stay higher for longer. Moreover, the odds of a rate hike at either the September or November meeting are now higher.
Indian rupee to inch up after Powell’s speech, key US data eyed
The US consumer confidence and job openings report is due later in the day. The ISM manufacturing number, the non-farm payrolls and the June quarter PCE data are due later in the week.
“Pay attention to today’s US Conference Board consumer confidence report,” DBS Research said in a note.
“DXY (dollar index) could correct lower if US consumer confidence index is lower.”
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