MUMBAI: The Indian rupee is poised to inch up at open on Thursday, supported by prospects of foreign equity inflows and a dollar that remains on the backfoot on account of U.S. tariff-related uncertainty.
The 1-month non-deliverable forward indicated that the rupee will open at 85.62 to 85.64 against the U.S. dollar compared with 85.6775 in the previous session.
The Indian currency has climbed more than 1% over the last three sessions. Foreigners have bought more than $1 billion of Indian shares over the past two days.
“The dominant theme right now is the weaker dollar, and the rupee is tagging along,” a currency trader at a bank said. He noted that sentiment on the interbank market has shifted decisively toward selling USD/INR on upticks.
The dollar index slid 0.8% on Wednesday, extending its April decline to more than 4%, and hovered near its lowest level in nearly three years.
The dollar has fallen out of favour with investors amid mounting uncertainty over U.S. trade policy. The continued back-and-forth over tariffs has weakened confidence in U.S. assets and clouded the near-term economic outlook.
Robust U.S. retail sales data released on Wednesday did little to help the dollar. U.S. March retail sales rose by the most in over two years, thanks largely to households rushing to purchase big-ticket items ahead of expected tariff-driven price increases, per ING Bank.
ING warned that with consumer confidence plummeting on price, job and wealth concerns, the consumer will be less of a growth engine later in the year.
Meanwhile, Federal Reserve Chair Jerome Powell on Wednesday acknowledged the economy appeared to have slowed last quarter, noting “inflation is likely to go up” on account of tariffs.
Despite the expected rise in inflation, investors are betting on more than three Fed rate cuts this year, anticipating that growth concerns will outweigh inflationary pressures.
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