Rupee to rise after dollar's biggest fall in over three months
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The Indian rupee will likely open higher on Friday, tracking a broad weakness in the dollar index, and as a new set of U.S. data fuelled hopes that the U.S. Federal Reserve may decide to be less hawkish than expected.
Non-deliverable forwards indicate the rupee will open at around 81.93-81.96 to the U.S. dollar, compared with its spot close of 82.1750 in the previous session.
The rupee had hit a five-week high of 82.03 on Thursday on the back of likely corporate dollar inflows but snapped a four-day winning streak after data showed that domestic trade deficit widened to a five-month high.
Meanwhile, the dollar index hit a five-week low on Thursday and saw its worst one-day session since March 13 after a hawkish European Central Bank (ECB) signalled more rate hikes.
The offshore Chinese yuan cooled around 7.13 levels from over 6-1/2-month lows hit in the previous session at 7.1922.
The rupee should see some appreciation on Friday, which should also benefit from the yuan's move, a trader with foreign bank said.
Also, higher U.S. jobless claims, data showing production at U.S. factories almost stalled in May and a fall in U.S. import prices last month helped fuel bets that the Fed would not follow through with more rate hikes after it signalled at least two more this year.
The rupee has gained about 0.35% so far this week, benefiting from likely corporate dollar inflows.
"Given the lack of significant events in the coming couple of weeks, the rupee is at an advantage in the short-term and any dip in USD/INR remains a good opportunity," said Srinivas Puni, managing director at QuantArt Market Solutions.
KEY INDICATORS: ** One-month non-deliverable rupee forward at 82.02; onshore one-month forward premium at 7 paisa ** USD/INR NSE June futures settled on Thursday at 82.2275 ** USD/INR June forward premium at 1.5 paisa ** Dollar index down at 102.15 ** Brent crude futures down 0.1% at $73.1 per barrel ** Ten-year U.S. note yield at 3.74% ** SGX Nifty nearest-month futures up 0.3% at 18,807 ** As per NSDL data, foreign investors bought a net $226.3 mln worth of Indian shares on Jun. 14
** NSDL data shows foreign investors sold a net $2.5mln worth of Indian bonds on Jun. 14
