MUMBAI: The Indian rupee is likely to open slightly higher on Thursday, boosted by equity inflows and after yet again managing to avoid hitting a record low in the previous session.
The one-month non-deliverable forward indicated the rupee will open at 83.92-83.94 to the U.S. dollar, compared with its close of 83.9525 in the previous session.
The local currency had inched down to 83.9675 on Wednesday but managed to avoid breaching its all-time low of 83.9725 mainly due to public sector banks’ dollar sales.
“Based on the past, the odds are that (these sales) were for the RBI (central bank),” a currency trader at a bank said.
“I think that we will not see 84 for this week at least. You have decent inflows coming through.”
India’s increased weightage in MSCI’s emerging market index, which comes into effect on Friday, is expected to lead to inflows of up to $3 billion, per Nuvama Alternative and Quantitative Research.
Usually, most of the inflows are on the day of the change, traders said.
Indian rupee may weaken slightly, tracking peers; RBI, Fed view key
Weak risk appetite, dollar recovery
Asian shares declined alongside U.S. equity futures as Nvidia’s shares slumped in after-hours trading following its results.
The dollar index has seen a bit of a recovery from Federal Reserve Chair Jerome Powell’s dovish comments.
The focus now turns to U.S. weekly jobless claims due later in the day, which gains importance considering Powell raised concerns over the health of the labour market.
“Powell affirmed the Fed does not seek or welcome further weakness in the labour market. That suggests the state of the labour market will set the pace and timing of rate cuts,” ANZ Bank said in a note.
Source: Brecorder
