By Anushka Trivedi
MUMBAI, March 20 (Reuters) - The Indian rupee is
expected to strengthen against the dollar on Tuesday as Asian
markets attempt to shake off jitters from a banking crisis in
the United States and Europe.
The non-deliverable forwards indicate the rupee will open at around 82.50-82.55 to the U.S. currency compared
with 82.6350 in the previous session.
Asian equities like Singapore and Australian shares were up over 1%, tracking a rally in U.S. shares
overnight and as European banking stocks recovered earlier
losses. The dollar index fell to 103.340.
UBS Group's state-backed takeover of Credit Suisse and
funding pledges from the world's top central banks seemed to
quell immediate fears of a contagion.
"Markets remain nervous, but the rapidity of policymakers'
response to the evolving banking sector risks is heartening,"
said Alvin Tan, Head of Asia FX Strategy at RBC Capital Markets.
Policymakers from Washington to Europe have asserted that
the current turmoil is different than the global financial
crisis 15 years ago as banks are better capitalised and funds
more easily available.
However, worries that other struggling banks could fail
persisted as global central banks may have to keep raising rates
to tame inflation - which had triggered the collapse of
U.S.-based mid-sized lenders in the first place.
San Francisco-headquartered First Republic Bank shares sank 47% overnight.
U.S. Treasury yields rose as investors weighed the chances
of whether the Federal Reserve will skip raising interest rates
on Wednesday amid the crisis.
Fed funds futures showed the odds of the central bank
holding rates or hiking by 25 basis points (bps) were nearly
even, with about 80 bps worth of cuts possible this year. Before the banking crisis began two weeks ago, markets were
expecting a 50 bps hike from this meeting and a peak Fed rate of
somewhere around 5.50%.
KEY INDICATORS
** One-month non-deliverable rupee forward at
82.74; onshore one-month forward premium at 20.54 paise
** USD/INR NSE March futures settled on Monday at 82.62
** USD/INR March forward premium is 2.75 paise
** Dollar index at 103.340
** Brent crude futures down 0.7% at $73.3 per
barrel
** Ten-year U.S. note yield at 3.5%
** SGX Nifty nearest-month futures up 0.4% at
17,087
** As per NSDL data, foreign investors sold a net $206 mln
worth of Indian shares on Mar. 17
** NSDL data shows foreign investors bought a net $86.2 mln
worth of Indian bonds on Mar. 17
(Reporting by Anushka Trivedi; Editing by Sohini Goswami)
anushka.trivedi.thomsonreuters.com@reuters.net))
