INDIA RUPEE-Rupee likely to open higher tracking Asia FX, improving near-term outlook

Kitco Media
By Reuters
Published:
Updated:
Reuters
By Nimesh Vora MUMBAI, Feb 16 (Reuters) - The Indian rupee is expected to open slightly higher against the U.S. currency on Thursday, tracking an uptick in most Asian currencies despite an overnight surge on the dollar index. The non-deliverable forwards indicated that the rupee will open at 82.70-82.75 to the dollar, compared with 82.8025 in the previous session. The local currency on Wednesday managed to hold above the closely watched 82.90-83.00 level despite mounting concerns over U.S. interest rates. Wednesday's session will reinforce the belief that it is quite difficult for USD/INR to move above the 83 level, a trader at a Mumbai-based bank said. Add to that the trade data and it looks like USD/INR may be headed to the lower side of its recent range, the trader said. India's merchandise trade deficit in January hit its lowest in a year at $17.75 billion, data showed. "The combination of falling goods deficit, downward historical revisions (smaller deficits than estimated earlier) and the rising services surplus has a positive implication for current account dynamics," Barclays said in a note to clients. The rupee's Asian peers rose on Thursday, helped by an uptick in Asian shares and U.S. equity futures. The dollar's jump against major peers overnight, following the U.S. retail sales data did not have an impact on Asian currencies or equities. The dollar index climbed a six-week peak after U.S. retail sales witnessed a sizeable rebound in January following two straight monthly declines. The two-year Treasury yields initially jumped to near 4.70%, the highest since November, before pulling back. The Federal Reserve terminal rate expectations at near 5.25%. Retail sales now add to a slew of robust U.S. data for January, which include non-farm payrolls and inflation, and this could support short-term U.S. rate expectations, DBS Group Research said in a note. KEY INDICATORS:

** One-month non-deliverable rupee forward at 82.82; onshore one-month forward premium at 12.50 paise

** USD/INR NSE Feb futures settled on Wednesday at 82.8850

** USD/INR Feb forward premium at 4.5 paise

** Dollar index at 103.62

** Brent crude futures up 0.6% at $85.86 per barrel

** Ten-year U.S. note yield near 3.80%

** SGX Nifty nearest-month futures up 0.3% at 18,070.50

** As per CDSL data, foreign investors bought a net 198.6mln worth of Indian shares on Feb. 14

** CDSL data shows foreign investors sold a net $63.9mln worth of Indian bonds on Feb. 14 (Reporting by Nimesh Vora; Editing by Rashmi Aich)

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