MUMBAI: The Indian rupee is likely to inch higher at open on Tuesday, lifted by a broad rally in Asian peers which pushed the Chinese yuan to its highest in nearly four months.
Non-deliverable forwards indicate rupee will open at around 83.30 to the US dollar compared with 83.34 in the previous session.
The rupee has not participated at all in dollar’s slump on soft US data prints.
The currency is within a whisker of its lifetime low of 83.42.
Based on how the rupee “has behaved over the last few days,” the slight relief at opening “is all there will be”, a fx spot trader at a bank said.
The USD/INR pair is “really well bid right now” and “interbank will have little interest in selling”, he said.
Asian currencies extended their recent rally, pushing the offshore yuan to near 7.1450 to the dollar, the highest since late-July.
The dollar’s decline against its major peers on bets that the Federal Reserve is done with rate hikes is showing no signs of letting up.
“The extent of dollar decline is highly dependent on how much market expects the Fed to cut and timing of first cut,” Christopher Wong, fx strategist at OCBC, said in a note.
Tracking a further drop in long maturity US Treasury yields, the dollar index was down to 103.30, the lowest in two-and-a-half months. The 10-year US Treasury yield was dropped to 4.40%.
Investors will focus on the minutes of the Fed’s last meeting, in which it decided to make no changes to the policy rate.
The minutes, due later in the day, come in the wake of investors having priced high probability that the Fed will cut rates in May next year.
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