By Nimesh Vora
MUMBAI, March 29 (Reuters) - The Indian rupee is
expected to open lower compared with the U.S. currency on
Wednesday, weighed down by likely position adjustments, traders
said.
The non-deliverable forwards indicate the rupee will open at 82.25-82.28, compared with 82.1875 in the previous
session.
The spot date for USD/INR is now April 3, compared with
March 31 as of Tuesday. The date shift to the new fiscal year
has increased the carry cost for holding long dollar positions
or the returns for holding short dollar positions overnight.
"We suspect that at the open, traders who took positions for
the carry will rush for cover," a trader at a Mumbai-based bank
said. "It will not surprise us if we see an uptick (on USD/INR)
immediately."
Asian currencies were mostly rangebound on the day and the
dollar index was little changed at about 102.50. The
abatement of acute fears around the U.S. banking sector has
impacted demand for the safe haven dollar.
An agreement to buy all of failed U.S. lender Silicon Valley
Bank's deposits and loans alongside steps taken by financial
regulators have alleviated fears around U.S. banks.
Further Michael Barr, the Federal Reserve's vice chairman
for supervision, said SVB's problems were due to "terrible" risk
management, suggesting the lender's collapse could be an
isolated issue. DBS Research noted that pricing of the Fed's policy path
"has swung from one extreme to another" amid the developments
around the SVB.
Futures are now pricing in about 50 basis points of rate
cuts this year and a Fed rate of 4.35% by December ,
compared with sub-4% at the peak of the crisis.
The 2-year Treasury yield is now above 4%, about 50 basis
points off its recent lows.
KEY INDICATORS:
** One-month non-deliverable rupee forward at
82.42; onshore one-month forward premium at 15 paisa
** USD/INR NSE April futures settled on Tue at 82.3225
** USD/INR April forward premium at 15.0 paisa
** Dollar index little changed at 102.50
** Brent crude futures up 0.4% at $79 per barrel
** Ten-year U.S. note yield rises to 3.58%
** SGX Nifty nearest-month futures up 0.1% at 17,000
** As per NSDL data, foreign investors sold a net $75.6
million worth of Indian shares on Mar. 27
** NSDL data shows foreign investors bought a net $28.6
million worth of Indian bonds on Mar. 27
(Reporting by Nimesh Vora; Editing by Savio D'Souza)
