MUMBAI: The Indian rupee will likely inch up at the open on Wednesday, tracking an uptick in most of its Asian peers, following which it is expected to have to contend with demand for the U.S. dollar from importers and speculators.
The 1-month non-deliverable forward indicated that the rupee will open at 86.50-86.52 per dollar, compared with its close of 86.5775 in the previous session.
Most Asian currencies were higher against the greenback, building on the previous day’s advance. In the wake of Donald Trump’s inauguration as U.S. president, the dollar index has been choppy, while Asian currencies have recovered.
The rupee, on Tuesday, managed to rally past 86.30 in opening trade, helped by Asian cues, before slipping.
Indian rupee to rise amid dollar swings on Trump tariff news flow
It is “amply evident from yesterday’s session” that “people are aching to buy dips (on dollar/rupee) pair, a currency trader at a bank said.
“Odds are that we have a similar session today, with good support (for dollar/rupee) on pullbacks.”
The direction for Asian currencies largely depends on what Trump does with regard to tariffs. He did not immediately impose tariffs when he took office on Monday, a relief for Asia.
That may not last. On Tuesday, Trump vowed to hit the European Union with tariffs and said his administration was discussing a 10% punitive duty on Chinese imports.
The offshore Chinese yuan declined to 7.2850 to the dollar.
“You can be sure that big changes are coming as far as U.S. trade is concerned, even if we didn’t get any new tariffs on President Trump’s first day in office,” ING Bank said in a note.
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