MUMBAI: The Indian rupee is likely to open slightly higher to the US dollar on Wednesday, shrugging off a decline in other Asian currencies. Non-deliverable forwards (NDF) indicate the rupee will open at 82.06-82.08, up slightly from 82.1175 in the previous session.

The USD/INR NDF has not reacted to another round of losses for the Chinese yuan and the move higher on USD/Asia overall, a forex trader at a private bank said.

“While it looks like it (USD/INR) will be lower at open, I will be surprised if we move back below 82 today.”

The rupee had declined on Tuesday, likely due to dollar outflows. “It could be that rupee is just making up for yesterday’s session,” another trader said.

Indian rupee ends flat against dollar

The offshore Chinese yuan dropped below 7.20 to the dollar, the lowest since November 2022.

The Korean won plunged about 1% and the Thai baht lost 0.3%.

China’s weak post-pandemic recovery alongside the differing interest rate outlook for the Asian country relative to the US has dented demand for the yuan.

The offshore Chinese yuan has lost 1% this month to add to the 3% decline in May.

The yuan is at its lowest level versus the rupee in over six months. The dollar index nudged higher in Asia ahead of US Federal Reserve Chair Jerome Powell’s testimony to lawmakers.

Powell will be speaking after the central bank last week kept rates on hold, but policymakers indicated two more rate hikes this year.

“We expect Fed Chair Powell to deliver a hawkish semi-annual testimony to Congress reflecting the FOMC’s (Federal Open Market Committee) median projection for higher interest rates in coming months and more resilient inflation in the near term,” ANZ said in a note.