By Nimesh Vora
MUMBAI, Jan 30 (Reuters) - The Indian rupee is expected
to open little changed to the dollar on Monday, with the focus
on the Union budget, the U.S. Federal Reserve's policy decision
and the fallout of the Adani Group episode.
The rupee is likely to open around 81.5225, the
same level as on Friday. The rupee underperformed its Asian
peers last week, posting its worst performance since
mid-December on the back of likely dollar purchases by the
Reserve Bank of India and hedging by importers.
There has so far been limited impact on the rupee of the
slump in Indian equities due to a U.S. short-seller's report on
Adani Group that flagged concerns about debt levels and the use
of tax havens.
Still, analysts reckon that the Adani development poses a
challenge for the rupee, with foreign outflows from Indian
equities picking up in wake of Hindenburg Research's report on
Wednesday.
Foreign investors have taken out $730 million in the two
trading sessions since then.
Indian equity markets "do present a headwind for the rupee"
as the currency is unable to capture much of the benefit of the
dollar weakening, Srinivas Puni, managing director at QuantArt
Market Solutions, said in an email.
The dollar index was hovering near 102, while most
Asian currencies were slightly higher. All eyes are on the Fed
policy decision due during U.S. trading hours on Wednesday.
While the Fed is widely expected to announce a smaller 25
basis point rate hike, its guidance on future policy is what
will affect the market. Fed futures have priced in rate cuts by
the central bank later this year.
India's federal budget will be presented on the same day as
the Fed decision. The budget's impact on local equities and the
bond yields will be important aspects for the rupee, according
to traders.
KEY INDICATORS:
** One-month non-deliverable rupee forward at
81.68; onshore one-month forward premium at 11 paisa
** USD/INR NSE February futures settled on Fri at 81.6725
** USD/INR Feb forward premium at 11.5 paisa
** Dollar index at 101.94
** Brent crude futures little changed at $86.7 per
barrel
** Ten-year U.S. note yield at 3.52%
** SGX Nifty nearest-month futures up 0.2% at 17,720
** As per NSDL data, foreign investors sold a net $31.4
million worth of Indian shares on Jan. 27
** NSDL data shows foreign investors bought a net $113.8
million worth of Indian bonds on Jan. 27
(Reporting by Nimesh Vora; Editing by Savio D'Souza)
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.