MUMBAI: The Indian rupee is likely to open marginally higher on Thursday after the currency slipped to a record low in the previous session, prompting the central bank to intervene.
Non-deliverable forwards indicate the rupee will open at around 83.33-83.34 to the US dollar, higher from its close at 83.3725 in the previous session.
The currency fell to a historical low of 83.45 on Wednesday on aggressive dollar demand from local and foreign banks towards the end of the session, traders said.
However, likely intervention from the Reserve Bank of India (RBI) helped the currency pare some of its losses, they said.
The RBI intervened across the spot, futures and the offshore non-deliverable forwards markets to support the rupee, three traders said.
It’ll be important to watch if the central bank nudges the rupee higher on Thursday, as a slight downward bias is likely to persist in the market till the rupee holds below 83.30, a foreign exchange trader at a private bank said.
Overnight, global index provider FTSE Russell did not add Indian bonds to its index, and said the nation will remain on the FTSE Fixed Income Country Classification Watch List for potential reclassification.
The dollar index was little changed at 104.32 while most Asian currencies fell, with the Malaysian ringgit, down nearly 0.3%, leading losses.
Indian rupee falls to record low, central bank likely steps in
Apart from the offshore Chinese yuan’s recovery from its recent lows, “there hasn’t been much catalyst of late to spur sustained strengthening of Asian currencies”, MUFG Bank said in a note.
Federal Reserve Governor Christopher Waller said on Wednesday that while he still expects the Fed to cut rates this year, “data suggests fewer rate cuts (are) possible”.
Odds of a Fed rate cut in June have dipped to about 64% from near 75% a week earlier, according to CME’s FedWatch tool.
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