Rupee pressed by weak Asia, supported by intervention hopes
By Nimesh Vora
MUMBAI, July 16 (Reuters) -The Indian rupee is expected to open largely unchanged on Tuesday despite a decline in Asian peers on expectationsthat the central bank will not allow the currency to drop to an all-time low.
Non-deliverable forwards indicate the rupee INR=IN will open flat from 83.5925 in the previous session. The dollar index =USD inched up and Asian currencies were down between 0.1% to 0.3%. The rupee hit an all-time low of 83.6650 hit last month.
At this level of the rupee, the impact of the moves in Asia will be "all the more" lower, a currency trader said.
"Clearly, the level to watch is 83.6650 and odds are that RBI will be defending that."
The Reserve Bank of India, via regular intervention, has held therupee in a narrow range. It is widely expected that the central bank will continue to do.
Asian currencies are struggling despite an increasing likelihood that the Federal Reserve will cut rates at least twice this year. A September rate cut has been fully priced in and futures are indicating a total of 68 basis points of rate cuts in 2024 amid softening inflation. FEDWATCH
Fed Chair Jerome over the June quarter do "add somewhat to confidence" that the pace of price increases is returning to the Fed's target in a sustainable fashion.
"Following recent US data releases on employment and inflation, we think that if Fed members were to submit their dot plot estimates now, a significant majority of members would be pencilling in two cuts this year and some of the more dovish members might be considering three," ANZ Bank said in a note.
Analysts have said the higher odds of Donald Trump winning the November election following his assassination attempt may be the reason Asian currencies are struggling.
KEY INDICATORS:
** One-month non-deliverable rupee INRNDFOR= forward at 83.64; onshore one-month forward premium at 7 paise
** Dollar index =USD up at 104.33
** Brent crude futures LCOc1 down 0.3% at $84.6 per barrel
** Ten-year U.S. note yield at 4.22%
** As per NSDL data, foreign investors bought a net $642.6mln worth of Indian shares on Jul. 12
** NSDL data shows foreign investors bought a net $70mln worth of Indian bonds on Jul. 12
Reporting by Nimesh Vora; Editing by Nivedita Bhattacharjee
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
