Indian rupee seen opening slightly lower as Fed signals more hikes
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The Indian rupee is expected to open a tad lower on Thursday after the U.S. Federal Reserve kept interest rates unchanged as expected, but flagged more hikes this year.
Non-deliverable forwards indicate the rupee will open around 82.12-82.14 against the U.S. dollar, compared with a spot close of 82.0950 in the previous session.
The Federal Reserve on Wednesday signalled in new projections that borrowing costs may need to rise by as much as half of a percentage point by the end of this year.
Policymakers see two more 25-basis-point hikes this year.
The hint that this could be a very short lived pause signifies a hawkish message and is an apparent positive for the U.S dollar, said Arnob Biswas, FX research head at SMC Global.
The dollar index dropped to its lowest in four weeks on Wednesday, but recovered and was up 0.2% on Thursday. The two-year U.S. yield dropped slightly in Asia after rising to its highest since March 10 to 4.8030%.
U.S. stocks ended mixed after the Fed's announcement, while in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan, were mostly flat.
The Fed outcome might put a cap on further rupee strength in the medium-term, said Srinivas Puni, managing director at QuantArt Market Solutions.
The Indian rupee had gained for a fourth consecutive session on Wednesday, rising 0.34% and hitting its highest since May 11. Corporate dollar flows aided the rupee, traders said.
Asian currencies were weak on Thursday, with offshore Chinese yuan extending declines against the dollar and hitting a fresh low since Nov. 2022.
KEY INDICATORS: ** One-month non-deliverable rupee forward at 82.25; onshore one-month forward premium at 7 paisa ** USD/INR NSE June futures settled on Wednesday at 82.1175 ** USD/INR June forward premium at 2.5 paisa ** Dollar index down at 103.29 ** Brent crude futures down 0.1% at $73.1 per barrel ** Ten-year U.S. note yield at 3.80% ** SGX Nifty nearest-month futures down 0.2% at 18,802 ** As per NSDL data, foreign investors bought a net $267.1 mln worth of Indian shares on Jun. 13
** NSDL data shows foreign investors bought a net $7.7 mln worth of Indian bonds on Jun. 13
