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01-01-1970 12:00 AM | Source: Reuters
Rupee likely to nudge higher; dollar index, flows key this week
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The Indian rupee is expected to inch up at open on Monday, with the focus being on the dollar index fares following last week's selloff and on overall flows.

Non-deliverable forwards indicate rupee will open at around 82.10-82.12 to the U.S. dollar compared with 82.1650 in the previous session.

The rupee's move is coming on the back of its best weekly performance in more than four months on cooling U.S. inflation - the local currency managed to strengthen past 82.

"That we did not sustain the drop below 82 (for USD/INR pair) makes me think that a quiet week is in the offing," an fx trader said.

"The dollar index will be the focal point this week and then you have the flows - equity and importers."

The dollar index was hovering just below 100 to begin the week while Asian currencies dropped, following last week's rally. Risk appetite was slightly soft.

With Federal Reserve officials in the quiet period ahead of the July 25-26 meeting, the focus will be on U.S. data this week. Data on retail sales and industrial production is due on Tuesday while housing data is due on Wednesday and Thursday.

"Upcoming data is likely to hint at a softening growth story, though this is unlikely to deter the Fed from tightening policy again this month," ING Bank said in a note.

Meanwhile, India's merchandise trade deficit in June was in line with expectations at $20.1 billion, data released on Friday showed.

The monthly goods trade deficit is slowly reverting to levels around $20-22 billion and is at "manageable levels", Barclays said in a note.

KEY INDICATORS: ** One-month non-deliverable rupee forward at 82.18; onshore one-month forward premium at 8 paisa ** USD/INR NSE July futures settled at 82.2075 on Friday ** USD/INR July forward premium at 3.75 paisa ** Dollar index at 99.96 ** Brent crude futures down 0.9% at $79.2 per barrel ** Ten-year U.S. note yield at 3.81% ** As per NSDL data, foreign investors bought $688.1 mln worth of Indian shares on a net basis on Jul. 13

** NSDL data shows foreign investors bought $5.1 mln worth of Indian bonds on a net basis on Jul. 13