Indian rupee looks to build on momentum on positive Asian cues
The Indian rupee will be looking to rise further versus the U.S. dollar on Tuesday, on back of rise in Asian currencies and positive risk mood.
Non-deliverable forwards indicate rupee will open little changed or slightly higher the dollar, having reached a three-week high of 81.8150 on Monday on equity inflows.
Offshore was indicating a quiet open, but USD/INR short positions will be counting on the favourable momentum to take pair below the next support of 81.75, a spot trader at a bank said.
"If RBI (Reserve Bank of India) keeps away, we see a decent chance of a breakdown."
Asian currencies rose, with the offshore Chinese yuan leading the way while the dollar index inched lower to near 101.30. Investors await the result of the two-day U.S. Federal Reserve meeting, due on Wednesday.
Ahead of the Fed decision, data indicated that the U.S. economy was still growing as the third quarter began, but at a slower rate from the April-June period.
S&P Global said its flash U.S. Composite PMI index, which tracks manufacturing and service sectors, fell to a reading of 52 in July from 53.2 in June.
The reading showed a sixth straight month of growth, but restrained by softening conditions in the service sector.
The data reinforced expectations that the near-certain rate hike by the U.S. central bank this week would be the last of the current cycle.
Attention is firmly fixed on the Fed meeting, ANZ said in a note. The flash PMI data are consistent with the Fed pausing rate hikes after raising it by 25 basis points this week, it said.
KEY INDICATORS: ** One-month non-deliverable rupee forward at 81.86; onshore one-month forward premium at 8 paisa ** USD/INR NSE July futures settled on Monday at 81.8375 ** USD/INR July forward premium at 1.25 paisa ** Dollar index down at 101.25 ** Brent crude futures up 0.2% at $82.9 per barrel ** Ten-year U.S. note yield at 3.86% ** As per NSDL data, foreign investors sold a net $171.3 mln worth of Indian shares on Jul. 21
** NSDL data shows foreign investors bought a net $27.5 mln worth of Indian bonds on Jul. 21
