MUMBAI: The Indian rupee will open higher on Thursday, tracking most Asian peers on upbeat risk, following which it is expected to run into dollar bids from importers.
Non-deliverable forwards indicate the rupee will open at around 82.92-82.94 to the US dollar, compared with 82.97 in the previous session.
The domestic currency rose to 82.8650 on Wednesday before finishing at the day’s low. Public sector banks were buyers of dollars, which a few market participants said was for the Reserve Bank of India while others said it was for their importer clients.
“Whatever it may be, its evident that dips (in USD/INR) are finding good buyers,” an FX trader at a bank said.
The “back and forth” around the well-defined range of 82.80-83.30 will “just continue”, he said.
Asian currencies were mostly higher on Wednesday, while the dollar index hovered just below 104. Asian shares advanced and US equity futures jumped after chip designer Nvidia’s first-quarter revenue topped expectations.
Indian rupee to rise on offshore dollar selling interest
Meanwhile, the minutes of the Federal Reserve’s January meeting alongside weaker-than-expected bond auction pushed US Treasury yields higher.
The bulk of policymakers at the Fed’s latest meeting were concerned about the risks of cutting interest rates too soon, with broad uncertainty about how long borrowing costs should remain at their current level, the minutes showed.
The odds of a Fed rate cut at the May meeting are less than 30% and a March rate cut has been priced out.
The Fed is now expected to cut borrowing costs by 86 basis points (bps) this year, a far cry from the 175 bps cuts expected about seven weeks ago.
The US central bank “is in no mood to chop rates just yet”, ING Bank said in a note. “The Fed can’t feel comfortable cutting with month-on-month rates that annualize to scary levels.”
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