MUMBAI: The Indian rupee is expected to remain above 83 to the US dollar on Monday on the back of an uptick in most Asian currencies and on bets of more central bank intervention.
Non-deliverable forwards indicate rupee will open at around 82.92-82.96 to the US dollar, barely changed from 82.9450 in the previous session.
Asian currencies were mostly higher to begin the week while the dollar index nudged lower.
With Asia cues positive “at the margin” and after the way the Reserve Bank of India (RBI) intervened in the afternoon on Friday, the rupee should, “on the face of it”, manage to hold above 83-level, a forex trader at a Mumbai-based bank said.
“I reckon importers will be up and about and dips (on USD/INR) will not be much.”
The RBI intervened aggressively in the afternoon on Friday via a large public sector, which traders said was likely to make sure that USD/INR did not achieve a weekly closing above 83.
The move higher on Asian currencies was attributed to the rally in Japanese yen after the Bank of Japan Governor signalled a likely end to the country’s negative interest rate policy when achievement of its 2% inflation target was in sight.
The offshore Chinese yuan climbed 0.4% to 7.3350 to the dollar on the back of the yen’s rally and another step by China to boost the stock market.
The main focus for Asian currencies this week will be on the US inflation data due Wednesday.
Indian rupee to see some relief on pullback in US yields, dollar index
The data comes in the wake of expectations that the Federal Reserve will hold fire in its September meeting. ANZ expected US core consumer price index to rise by 0.2% month-on-month in August.
“This will be enough for the Fed to skip a hike in September but it’s not enough to convince it to remove the possibility of any further hikes down the track,” it said in a note.
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