Indian rupee set to ignore weaker Asian peers, eyes US-India trade deal cues

MUMBAI: The Indian rupee is set to look past weaker Asian peers at open on Wednesday, with traders tracking headlines around the U.S.-India trade deal that could influence sentiment and flows.

The 1-month non-deliverable forward indicated the rupee will open in the 88.58-88.62 range versus the U.S. dollar, having settled at 88.6050 on Tuesday.

Asian peers were marginally weaker, while the dollar index inched higher.

A currency trader at a private sector bank said there has been “incremental” news flow around the U.S.-India trade deal, though it is “hard to know what to make of it yet”.

The rupee is anyway stuck in a tight range, the trader added, making it unlikely that minor moves in Asia will shift the pair.

Commerce and Industry Minister Piyush Goyal on Tuesday remarked that “good news” on the India–U.S. trade pact will follow only after the two sides reach terms that are fair, equitable and balanced, media reports said.

There has been a steady stream of headlines around the India–U.S. trade deal, with little in the way of a definitive agreement to help the rupee.

The currency has largely held its current level thanks to the Reserve Bank of India’s defence of the 88.80 level, per bankers.

The rupee has been largely struggling amid importers stepping up hedging, with exporters contributing only modest flows.

Meanwhile, the Indian currency will have to contend with the weak risk mood, with U.S. equities extending losses on Tuesday.

The S&P 500 index logged a fourth straight session of losses on concerns about the valuations of AI shares.

That, alongside a drop in the probability of the Federal Reserve delivering a third rate cut this year, has supported the dollar and undermined demand for Asian currencies.