By Anushka Trivedi
MUMBAI, Jan 31 (Reuters) - The Indian rupee is expected
to weaken on Tuesday, as the dollar gained on tepid risk
appetite, with investors keeping tabs on the Adani Group saga,
the upcoming Union budget and global central bank meetings.
The rupee was seen around 81.60-81.65 per dollar in
early trades, compared to its previous close of 81.4950.
The currency's future direction will be clear once the risk
events this week are out of the way and we are likely to
continue see rangebound moves until then, said a trader with a
Mumbai-based bank.
We don't expect much fallout from the Adani Group-led
selloff in equities but the situation will have to be monitored,
the trader added.
So far, there has been a limited impact on the currency, but
foreign investor outflow has reached more than $1 billion over
the past three sessions since the Hindenburg report was
published. Meanwhile, most Asian emerging market currencies declined as
the dollar index climbed above the 102 level overnight,
with caution setting in ahead of the U.S. Federal Reserve
decision due late on Wednesday.
While a 25-basis-point hike is widely expected, a key marker
would be how Fed officials respond to markets pricing in rate
cuts later this year.
Investors also await India's Union budget on Feb. 1, in
which the focus will be on the government's fiscal consolidation
path.
India's annual pre-budget economic survey is likely to peg
GDP growth at 6-6.8% for 2023-24, the slowest in three years, a
source told Reuters.
"Depreciation pressures on the rupee are expected to
resurface in fiscal 2024," said Gaura Sen Gupta, an economist at
IDFC First bank.
Even as India's current account deficit is expected to
narrow, the improvement could be limited by export weakness as
global growth is expected to be weaker over the period, Sen
Gupta added.
KEY INDICATORS:
** One-month non-deliverable rupee forward at
81.69; onshore one-month forward premium at 11 paisa
** USD/INR NSE Feb futures settled on Monday at 81.6275
** USD/INR Feb forward premium is 10.5 paisa
** Dollar index at 102.17
** Brent crude futures up 0.4% at $85.3 per barrel
** Ten-year U.S. note yield at 3.55%
** SGX Nifty nearest-month futures up 0.6% at 17,802
** As per NSDL data, foreign investors sold a net $752.5 mln
worth of Indian shares on Jan. 30
** NSDL data shows foreign investors sold a net $71.1 mln
worth of Indian bonds on Jan. 30
(Reporting by Anushka Trivedi)
anushka.trivedi.thomsonreuters.com@reuters.net))
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