Rupee to open a tad weaker tracking Asian peers, US inflation data eyed
By Jaspreet Kalra
MUMBAI, Nov 27 (Reuters) -The Indian rupee is expected to open slightly weaker on Wednesday, tracking declines in most of its Asian peers, with traders awaiting U.S. inflation data due later in the day while expecting the rupee to gradually weaken towards 84.50.
The 1-month non-deliverable forward indicated that the rupee INR=IN will open at 84.34-84.35 to the U.S. dollar, compared with 84.3275 in the previous session.
The dollar index was little changed at 106.8. Most Asian currencies declined, with the Indonesian rupiah down 0.4% and leading losses.
U.S. President-elect Donald Trump's pledge to levy tariffs on the country's three largest trading partners -- Canada, Mexico and China -- pressured Asian currencies, with the offshore Chinese yuan declining to its weakest in four months on Tuesday.
"For Asian currencies, we continue to think the likes of CNH, KRW, THB, and MYR are vulnerable (to tariffs) while INR will be relatively more insulated," MUFG Bank said in a note.
Indeed, the rupee fared better than most of its Asian peers after Trump's comments, supported by dollar inflows related to the rebalancing of MSCI's global equity indexes.
With the inflow out of the way, traders expect the rupee to consolidate between 84.20 and 84.50 in the near term, although with a slightly negative bias.
On the day, the rupee is likely to be pressured by dollar demand related to month-end payables of importer merchants, a salesperson at a private bank said.
"Price-action is largely flow dependent as the bias (on USD/INR) is on the higher side but interbank traders remain wary of entering long bets," the salesperson said.
Last week, the Reserve Bank of India asked banks to trim speculative long bets on the dollar-rupee pair as the currency weakened to its all-time low of 84.5075, Reuters has reported.
Investors now await U.S. personal consumption expenditure (PCE) inflation, due later in the day, for cues on the future path of Federal Reserve policy rates.
KEY INDICATORS:
** One-month non-deliverable rupee INRNDFOR= forward at 84.47; onshore one-month forward premium at 13.75 paise
** Dollar index =USD at 106.86
** Brent crude futures LCOc1 down 0.1% at $72.7 per barrel
** Ten-year U.S. note yield at 4.3%
** As per NSDL data, foreign investors bought a net $1.1 billion worth of Indian shares on Nov. 25
** NSDL data shows foreign investors bought a net $236.8mln worth of Indian bonds on Nov. 25
Reporting by Jaspreet Kalra; Editing by Savio D'Souza
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