Indian rupee likely flat on dollar pullback, oil surge
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The Indian rupee is tipped to open flat to the U.S. currency on Tuesday after oil prices scaled to a one-month high and as the dollar index retreated.
In early trade, the rupee is expected around the same level of 79.9625 from the previous session.
The unit fell to a record low of 80.12 on Monday before slipping back above the psychological level of 80 on likely intervention by the Reserve Bank of India.
Oil prices "back on upward trajectory" is an issue for the rupee, a trader at a Mumbai-based bank said.
"However, if the rupee after all the negative cues still managed to hold above 80 yesterday, then there is little reason to chase the pair (USD/INR) higher."
The Brent crude futures contract jumped 4% on Monday, its best session in six weeks, on prospects of OPEC+ supply cuts.
Brent is now hovering near $104.50 a barrel, a sizeable recovery from its recent low of around $91.50.
The dollar index held its ground near 108.80, down from a 20-year peak of 109.48. The slight pullback on the dollar index came amid a recovery in the euro.
The euro, which was supported by expectations that the European Central Bank could opt for a 75-basis-point rate hike, rose to near parity to the dollar.
The slight moderation in risk aversion further weighed on demand for the safe-haven dollar.
Near-term Treasury yields were hovering near their highest levels since 2007. The focus this week will be on the U.S. ISM manufacturing and non-manufacturing data and the monthly jobs report.
The jobs report on Friday and the U.S. consumer inflation report due next week will be instrumental in shaping expectations on whether the Federal Reserve hikes rate by 50 basis points or 75 basis points next month.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 80.16; onshore one-month forward premium at 21.51 paise
** Dollar index up at 108.85
** Brent crude futures at $104.4 per barrel ** Ten-year U.S. note yield at 3.10%
** SGX Nifty nearest-month futures up 0.3% at 17,438 ** As per NSDL data, foreign investors sold a net $14.2mln worth of Indian shares on Aug. 26
** NSDL data shows foreign investors bought a net $19.9mln worth of Indian bonds on Aug. 26
(Reporting by Nimesh Vora; Editing by Sherry Jacob-Phillips)
