Non-deliverable forwards indicate the rupee will open at around 82.08-82.10 to the U.S. dollar compared with 82.0375 in the previous session.
The rupee on Tuesday declined past 81.95-82, a level that traders reckoned was the near-term resistance for the USD/INR pair. Hedging by importers, possible dollar outflow and stop-losses were among the reasons cited by traders for the currency weakening past 82. "After yesterday's session, you would have to say the bias (on USD/INR) has shifted slightly to the upside," a senior sales official said.
"Today, it will be about how much follow through is there
and then obviously the U.S. inflation data will be crucial for
the dollar's direction."
Economists polled by Reuters expect the U.S. core inflation
rate to rise 0.4% month-on-month in April, matching the pace in
March. The headline inflation rate is expected to rose 5%
on-year.
Risk assets struggled ahead of the data. Asian shares,
tracking the overnight fall in U.S. equities, dropped.
"Anxiety may be building ahead of today’s inflation figures
out of the U.S., where progress lower is likely to be limited,
non-existent or even possibly go into reverse," ING Bank said in
a note.
Near maturity U.S. yields were up with the 2-year reaching
4.07% overnight. The odds that the U.S. Federal Reserve will opt
for a pause were slightly lower at near 80%. Meanwhile, on the U.S. debt ceiling front, U.S. President
Joe Biden and House of Representatives Speaker Kevin McCarthy
remained divided over raising the $31.4 trillion U.S. debt limit
following talks on Tuesday.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 82.20;
onshore one-month forward premium at 10.75 paisa
** USD/INR NSE May futures settled on Tuesday at 82.1225
** USD/INR May forward premium at 6.5 paisa
** Dollar index at 101.56
** Brent crude futures down 0.6% at $77 per barrel
** Ten-year U.S. note yield at 3.51%
** SGX Nifty nearest-month futures up 0.2% at 18,344
** As per NSDL data, foreign investors bought a net $386.8mln
worth of Indian shares on May. 8
** NSDL data shows foreign investors bought a net $107.1mln
worth of Indian bonds on May. 8
(Reporting by Nimesh Vora; Editing by Nivedita Bhattacharjee)
