Rupee poised to open higher on Chinese yuan boost; eyes 82.50/$ level
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The Indian rupee is expected to open higher versus the U.S. dollar on Wednesday, helped by a Chinese yuan-led advance in Asian currencies.
The non-deliverable forwards indicate the rupee will open at around 82.54-82.58 to the U.S. dollar, compared with 82.6650 in the previous session.
The offshore yuan rose above 6.94 to the dollar, while other Asian currencies were up 0.1% to 0.3%. The yuan had fallen to near 6.99 on Monday on concerns over the U.S. inflation outlook.
The yuan's recovery alongside the "non-yielding" of the 82.90-83 levels is pushing the rupee to the higher side of its range, a currency trader at Mumbai-based bank said.
The rupee will now have to contend with the support (on USD/INR pair) near to the 82.50 level, which will be "difficult to infringe," the trader said.
Beyond the yuan, other cues for the rupee were negative. The 2-year U.S. yield was up at 4.84%, the dollar index was at 104.98 and India's GDP data disappointed.
Data released late Tuesday revealed that India's economy recorded year-on-year growth of 4.4% in October-December, down from 6.3% in July-September and below the 4.6% reading expected by economists polled by Reuters.
"The moderation in year-on-year GDP growth reflects less supportive base-effect," IDFC First Bank said in a note.
"From a monetary policy perspective, the GDP print is unlikely to change the RBI’s (Reserve Bank of India's) focus from tightening policy, as growth was in line with RBI’s estimate."
Meanwhile, the focus is on the U.S. ISM manufacturing data due later in the day and services print on Friday for cues on the current U.S. Federal Reserve interest rate cycle.
Futures pricing currently suggests a peak of around 5.4% in the Fed funds rate by September.
KEY INDICATORS: ** One-month non-deliverable rupee forward at 82.77; onshore one-month forward premium at 21 paisa ** USD/INR NSE March futures settled on Tue at 82.7150 ** USD/INR March forward premium at 12.0 paisa ** Dollar index at 104.94 ** Brent crude futures up 0.5% at $83.9 per barrel ** Ten-year U.S. note yield rises to 3.94% ** SGX Nifty nearest-month futures down 0.1% at 17,378 ** As per NSDL data, foreign investors sold a net $196.4 mln worth of Indian shares on Feb. 27
** NSDL data shows foreign investors sold a net $7.2mln worth of Indian bonds on Feb. 27
