Rupee higher on rally in peers; Jackson Hole in focus this week
By Nimesh Vora
MUMBAI, Aug 19 (Reuters) - The Indian rupee is expected to open higher on Monday, boosted by a broad decline in the U.S. dollar amid upbeat risk appetite and expectations of the Federal Reserve's interest rate cuts.
The 1-month non-deliverable forward indicated that the rupee INR=IN will open at 83.86-83.88 to the U.S. dollar, compared with 83.94 in the previous session.
The Korean won and the Malaysian ringgit led Asian currencies higher to begin the week, climbing 1%. The dollar index extended Friday's 0.5% drop while Asian shares advanced.
"Decentsized" moves in Asia have "taken (the level of) 84 (on dollar/rupee) out of the view for the moment," a currency trader at a bank said.
"The question is what happens after the opening dip. Based on recent sessions, the odds are in favour of the dip not holding up."
The dollar struggled despite data indicatinga recovery in U.S. consumer confidence. U.S. consumer sentiment rose in August, while inflation expectations remained unchanged over the next year and beyond, a survey showed on Friday.
The consumer confidence data follows healthy U.S. retail sales and a smaller-than-expected rise injobless claims, allaying fears of an economic slowdown spurred by the weak July U.S. non-farm payrolls data.
Investors have dialled back expectations of a larger 50 basis points rate cut by the Federal Reserve at next month's meeting. Odds of 50 bps rate cut are now at just 1-in-4 compared to more than 50% after the payrolls data. FEDWATCH
Fed Chair Jerome Powell'scomments at the annual Jackson Hole Economic Policy Symposium on Friday will provide cues on the timing and size of rate cuts. The Jackson Hole event has in the past been astage for future policy.
Powell could provide a stronger signal that the Fed will proceed with rate cuts at the September meeting amid data showing disinflation, MUFG Bank said in a note.
KEY INDICATORS:
** One-month non-deliverable rupee INRNDFOR= forward at 83.94; onshore one-month forward premium at 7 paisa
** Dollar index =USD down at 102.34
** Brent crude futures LCOc1 down 0.1% at $79.6 per barrel
** Ten-year U.S. note yield at 3.89%
** As per NSDL data, foreign investors sold a net $283.3mln worth of Indian shares on Aug. 14
** NSDL data shows foreign investors bought a net $58.2mln worth of Indian bonds on Aug. 14
Reporting by Nimesh Vora; Editing by Nivedita Bhattacharjee
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