MUMBAI: The Indian rupee is set to fall at open on Thursday, pegged back by risk aversion fuelled by the US auto tariffs and the shift in the spot date to the next fiscal year beginning April 1.
The 1-month non-deliverable forward indicated that the rupee will open at 85.80-85.88 to the US dollar compared with 85.7050 in the previous session.
Asian shares dropped, and US equity futures extended losses after US President Donald Trump announced new tariffs on all auto imports, intensifying the ongoing trade conflict.
US equities had already experienced a sell-off before Trump’s announcement.
The dollar index reached a three-week high on Wednesday before partially retracing.
The rupee’s anticipated weakening due to the shift in the spot shift has been amplified by the souring of the risk appetite, a currency trader at a Mumbai-based bank said.
With India’s money markets shut on March 31 and April 1 for a local holiday, Thursday’s spot trades will be settled on April 2.
Wednesday’s spot date was March 28.
The rupee at open will have to adjust for the carry cost - around 10/12 paisa - between this fiscal’s last day and the next fiscal’s first day, opening on a weaker note.
Interbank traders who went short on the dollar/rupee on Wednesday for the carry trade will be looking to buy the pair at open.
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