Rupee headed higher at open on possible inflows, dollar decline
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The Indian rupee is poised to open higher versus the U.S. currency on Friday, helped by expectations of dollar inflows and the advance on its Asian peers.
The non-deliverable forwards indicate the rupee will open at around 82.38-82.42 to the U.S. dollar compared with 82.5925 in the previous session.
Foreign institutional investors bought shares of 127.7 billion rupees ($1.55 billion) on Mar 2, according to provisional data from the exchanges.
The inflow was likely related to investment by foreign investors into shares of Adani Group companies. U.S. boutique investment firm GQG Partners bought shares worth $1.87 billion in four Adani group companies, a regulatory filing showed.
A spot trader at a private bank said markets would want to know whether these flows had already come in, and how the banks who would receive the money are positioned.
Another trader pointed out that a part of the reason for the decline on USD/INR on Wednesday to 82.36 may have been due to these flows.
"There was talk that day of some other flow. In hindsight, it could be the Adani inflow." he said.
The rupee will be assisted at open by its Asian peers. The Korean won was up more than 1% and the offshore Chinese yuan rose to above 6.90 to the dollar. The dollar index dipped.
U.S. yields softened slightly while the U.S. Federal Reserve peak rate expectations were hovering near 5.44%. Data out on Thursday supported the ongoing repricing higher Fed terminal rate.
The number of Americans filing new claims for unemployment benefits fell again last week, pointing to sustained labour market strength and adding to financial market fears that the Federal Reserve could keep hiking interest rates for longer.
And, the final revision of the December quarter U.S. unit labour costs came in well above expectations, Morgan Stanley said in a note.
KEY INDICATORS: ** One-month non-deliverable rupee forward at 82.50; onshore one-month forward premium at 14.5 paise ** USD/INR NSE March futures settled on Thursday at 82.7050 ** USD/INR March forward premium at 10.5 paise ** Dollar index down at 104.88 ** Brent crude futures down 0.4% at $84.4 per barrel ** Ten-year U.S. note yield falls to 4.05% ** SGX Nifty nearest-month futures up 0.6% at 17,465 ** As per NSDL data, foreign investors bought a net $101.9mln worth of Indian shares on Mar. 1
** NSDL data shows foreign investors bought a net $15.3mln worth of Indian bonds on Mar. 1
