MUMBAI: The Indian rupee may open little changed on Monday, with traders watching flows, updates on the U.S.-India trade talks, and the Chinese yuan’s trajectory following last week’s turbulence.
The 1-month non-deliverable forward indicated that the rupee will open barely changed from 85.5050 against the U.S. dollar on Friday.
The rupee moved in a broad range of 84.62 to 85.72 last week, before posting a weekly decline despite the truce between India and Pakistan.
Bankers attributed the weakness to persistent dollar demand stemming from near-term payment requirements and a one-off outflow facilitated by foreign and state-owned banks.
The rupee’s near-term outlook is clouded after last week’s broad two-way price action, said a currency trader at a private bank.
“The 85.80-86.00 level will prove to be a formidable resistance (for dollar/rupee pair) and I am inclined to sell there more than buying on weakness.”
Besides flows, interbank traders will track headlines on the U.S.-India trade agreement.
The lingering uncertainty on that front has weighed on the rupee’s performance, MUFG Bank said last week.
Meanwhile, the offshore Chinese yuan was marginally weaker, having inched up last week.
The U.S. and China agreed to a deal last week to slash reciprocal tariffs, boosting the yuan and lifting risk appetite.
The dollar advanced against its major peers last week. It was little changed on Monday.
Moody’s downgrade of the U.S. credit rating - the last of the major ratings agencies to slash the rating - did not have much of an impact on the dollar or U.S. Treasury yields.
The rating agency cited rising debt and interest for the rating change.
The U.S. fiscal challenges is a surprise to no one, ANZ Bank said in a note.
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