Rupee may open higher after moving above key levels
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MUMBAI - The Indian rupee may open slightly higher against the dollar on Wednesday, building on the previous day's momentum when it managed to move above important resistance levels, traders said.
The rupee is tipped to open at around 81.66-81.70 compared with 81.7850 in the previous session. The local currency had its best session in two months on Monday, rallying 0.7%.
Yesterday, the rupee managed to scale multiple resistance levels that were there between 81.80 to 82.20, surprising most market participants, a spot trader at a foreign bank said.
The rupee will simply be carrying yesterday's momentum at open, he added.
Traders cited stop losses and help from the decline in USD/INR offshore points as reasons for the rupee's jump on Tuesday. The surge had followed a period in which the rupee was in a fairly narrow range.
Anil Bhansali, head treasury at Finrex Treasury Advisors, reckoned that after Tuesday's move, the new support levels for USD/INR are at 81.70 and 81.40.
The rupee's Asian peers were trading mostly lower while the dollar index was slightly higher. U.S. Federal Reserve Chair Jerome Powell, in a speech in Sweden on Tuesday, refrained from commenting on the rate policy. He said the Fed's independence was essential for it to battle inflation.
Meanwhile, Fed Governor Michelle Bowman said that U.S. central bank will have to raise interest rates further to combat high inflation, in line with comments from other policymakers.
Investor attention is now squarely focussed on U.S. inflation data, due on Thursday. A softer-than-expected print would further embolden bets that the Fed will step back from its aggressive rate cycle.
U.S. equities rose overnight, adding to its post non-farm payrolls data rally. Asian shares were mixed.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 81.72; onshore one-month forward premium at 13.0 paise
** USD/INR NSE January futures settled on Tuesday at 81.83
** USD/INR January forward premium at 7.0 paise
** Dollar index at 103.28
** Brent crude futures down 0.8% at $79.5 per barrel
** Ten-year U.S. note yield at 3.59%
** SGX Nifty nearest-month futures up 0.1% at 18,004
** As per NSDL data, foreign investors bought a net of $7 mln worth of Indian shares on Jan. 9
** NSDL data shows foreign investors bought a net of $61.2 mln worth of Indian bonds on Jan. 9
