MUMBAI: The Indian rupee is tipped to open little changed on Tuesday on persistent dollar demand and bets that the central bank will not allow the currency to slip to an all-time low.
Non-deliverable forwards indicate the rupee will open nearly unchanged from 83.4875 in the previous session.
Traders have cited dollar demand from oil companies and related to the daily corporate outflows as reasons for the rupee being under constant pressure on Monday. “It’s very noticeable from the price action the (dollar) demand and a lack of selling interest.
Only real demand will be there at the current level, knowing that the RBI (Reserve Bank of India) will probably want to hold 83.50-83.55,“ an FX trader at a bank said.
The rupee has been in a range of roughly 83.35-83.50 over the last few sessions.
Asian peers were mostly rangebound with no US data releases. US yields were quiet, with the 10-year hanging near 4.50% and the dollar index at 105.20.
The focus this week is on a host of Federal Reserve speakers before the US consumer inflation data due next Wednesday. Investors are having to contend with uncertainty on the Fed interest rate outlook.
On the one hand, the last three inflation readings have been higher.
On the other, the recent first-tier US data has been softer than expected - payrolls rose less than expected and manufacturing and services activity contracted last month, according to surveys. Amid all this, ING Bank said it is sticking to its call of a Fed rate cut in September.
“To deliver it, we think we need at least three 0.2% or below month-on-month core inflation prints and the unemployment rate getting above 4% with a little bit more evidence of softening consumer spending growth,” ING said in a note.
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