MUMBAI: The Indian rupee is expected to open little changed on Wednesday on a drop in US Treasury yields and weak risk before Federal Reserve Chair Jerome Powell’s testimony to lawmakers.
Non-deliverable forwards indicate rupee will open barely changed from 82.8950 in the previous session.
The S&P 500 Index had its worst day in three weeks on Tuesday while the 10-year US Treasury yield dropped to a one-month low.
The dollar index briefly dropped below 103.60 in the New York session.
Asian currencies were mostly rangebound.
“Count on a 3-4 paisa range today (for USD/INR). What direction Powell points to (on interest rates) will obviously be important,” an FX trader at a bank said.
“Having said that, we all know that the bar for making the rupee is pretty high.”
Indian rupee to struggle on rise in US Treasury yields, weak Asia
The rupee has been in a very narrow range for more than two weeks.
Powell’s testimony to the Senate Banking Committee will be eyed for indications of when the Fed is likely to begin cutting interest rates.
Fed officials have repeatedly signalled that they are in no hurry to cut interest rates and Powell is expected to maintain that.
“We expect him to lean hawkish and stick to the script he has been using since the January Fed meeting,” ANZ said in a note.
Recent inflation data - the US January consumer inflation reading was higher than expected - point to Powell holding the stance that the Fed will proceed cautiously on rate cuts.
Ahead of Powell’s testimony, data showed that the US services industry grew in February.
This follows the larger-than-expected contraction in US manufacturing.
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