Indian rupee recovery aided by dollar’s stumble; spotlight on forwards after RBI’s FX swap

MUMBAI: The Indian rupee is set to draw support from the dollar’s slide to a more than two-month low at Wednesday’s open, while attention will turn to forward premiums after the Reserve Bank of India unveiled a $10 billion dollar–rupee swap.

The 1-month non-deliverable forward indicated the rupee will open in the 89.50-89.60 range versus the US dollar, having settled at 89.65 on Tuesday.

The rupee has moved in a holding pattern over the past two sessions after a notable recovery triggered by central bank intervention.

The currency now has some distance from its all-time low of 91.0750 per dollar, while the dollar’s ongoing struggles and positive risk sentiment are expected to provide additional support.

The dollar being on the back foot provides the rupee with additional breathing space, a currency trader at a bank said.

It needs that help to hold on to current levels, which the market knows “won’t be straightforward”, he added.

The dollar index fell to 97.75 in Asian trade, its lowest level in more than two months. The decline came despite data showing the U.S. economy expanded faster than expected in the third quarter.

Analysts attributed the dollar’s weakness to turn-of-the-year position adjustments and data that showed US consumer confidence fell to its lowest level since April.