Rupee to rise more after dollar`s biggest fall in a month
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The Indian rupee is expected to open higher on Friday after the dollar index saw its worst session in almost a month on upbeat risk and wagers that the U.S. Federal Reserve will not raise rates at the June meeting.
Non-deliverable forwards indicate rupee will open at around 82.30-82.32 to the U.S. dollar compared with 82.4050 in the previous session.
The rupee on Thursday had its best day in almost two months, led by a surprisingly strong domestic GDP reading.
"Taking into account how yesterday shaped up and the extent to which the dollar has fallen, we think there will be bigger fall (on USD/INR) at open than what offshore is indicating, a forex spot trader at a bank said.
The dollar index on Thursday dropped 0.6% to near 103.50, the worst session since May 3. The rally on U.S. equities - the S&P 500 Index rose 1% overnight - and mounting expectations that the Fed will skip hiking rates in June undermined demand for the dollar.
Comments by two Fed officials that they prefer not raising rates at this month's meeting, alongside an article in the Wall Street Journal that the U.S. central bank will hold rates at the current level at the June meeting, pushed down the odds of any rate action at the June 13-14 meeting.
The probability of a Fed rate hike at the June meeting has dropped to near 30%.
Two reports are due before the June meeting that could change this probability - the U.S. jobs report due later in the day and the inflation data scheduled on June 12.
"A strong jobs reading.. could easily swing things back in favour of a hike," ING Bank said in a note.
KEY INDICATORS: ** One-month non-deliverable rupee forward at 82.40; onshore one-month forward premium at 8 paisa ** USD/INR NSE June futures settled on Thursday at 82.50 ** USD/INR June forward premium at 7 paisa ** Dollar index down at 103.49 ** Brent crude futures up 0.4% at $74.6 per barrel ** Ten-year U.S. note yield at 3.61%
** SGX Nifty nearest-month futures up 0.4% at 18,641 ** As per NSDL data, foreign investors bought a net $464.2mln worth of Indian shares on May 31
** NSDL data shows foreign investors sold a net $12.6mln worth of Indian bonds on May 31
