MUMBAI: The Indian rupee is expected to open marginally higher on Wednesday after the US dollar retreated from a more than four-month high.
Traders, however, said that the upside was likely to be limited after the opening uptick. Non-deliverable forwards indicate rupee will open at around 82.35 to the dollar compared to 82.3850 previous close.
The dollar index pulled back slightly from a more than four-month high of 105.10 hit on Monday, while the offshore Chinese yuan recovered to 7.2426.
If there is a dip at open (on USD/INR pair) will “in most likelihood it will have very little carry on”, a forex salesperson at a bank said.
“From out client interactions, we see considerable interest to buy (USD/INR) right now, which I think probably reflects the nervousness from last week’s moves.”
Last week, the USD/INR pair climbed to a record high of 83.45, surprising market participants.
The central bank likely intervened to make sure that the rupee remained confined to its long-held range, traders said.
Data released overnight showed US job openings edged up in February and new orders for US-manufactured goods increased more than expected. This follows data that showed an unexpected expansion in manufacturing activity.
This pushed the 10-year US Treasury yield to 4.40%, the highest in four months, before it pulled back.
The data had little impact on the odds of what the Federal Reserve is likely to do at its May and June meetings. Investors have nearly priced in a May rate cut and odds of a June rate cut are near 60%.
A slew of Fed officials are due to speak this week, which ANZ Bank said “can provide guidance on the path of monetary policy”.
On Tuesday, San Francisco Fed President Mary Daly said she believes three interest-rate cuts this year is a “reasonable” expectation.
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