Rupee to search for direction on soft US data, weak risk
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The Indian rupee is expected to open little changed or marginally higher on Friday, after weak U.S. data prompted a pullback on U.S. yields and dampened risk appetite.
The non-deliverable forwards indicate the rupee will open at around 82.10 to 82.15 to the dollar compared with 82.1475 in the previous session.
The local currency on Thursday managed to nudge higher, halting its recent losing run and avoiding slipping below the 82.20-82.30 level.
The rupee at open "will be dealing with conflicting cues", a trader at private sector bank said.
"On one hand, the dollar index is down alongside U.S. yields, and on the other, U.S. growth worries is impacting risk," he said.
The 82.20 to 82.30 level should hold up "for now" and there should be "decent" dollar demand ahead of 82.
The 2-year U.S. yield inched lower in Asia, adding to Thursday's decline following soft U.S. data.
The number of Americans filing new claims for unemployment benefits increased moderately last week, and a report by the Philadelphia Federal Reserve showed that manufacturing activity in the mid-Atlantic unexpectedly contracted in April.
The two data points when combined with the slump in U.S. retail sales and manufacturing activity fuelled recession worries.
The softer-than-expected regional Fed survey prompted market participants to price in a lower policy rate path in 2024 for the U.S. Federal Reserve, Morgan Stanley noted in its daily update to clients.
Meanwhile, Fed speakers mostly reinforced current market expectations that the U.S. central bank will opt for another rate hike in May and then pause.
There is more Fed speak lined up on Friday with six separate speaking engagements on the calendar, according to ING.
KEY INDICATORS: ** One-month non-deliverable rupee forward at 82.21; onshore one-month forward premium at 11.5 paisa ** USD/INR NSE April futures settled on Thursday at 82.1725 ** USD/INR April forward premium at 1.5 paisa ** Dollar index at 101.78 ** Brent crude futures down 0.2% at $81 per barrel ** Ten-year U.S. note yield drops to 3.53% ** SGX Nifty nearest-month futures at 17,668 ** As per NSDL data, foreign investors bought a net $20.6 mln worth of Indian shares on April 19
** NSDL data shows foreign investors sold a net $1.7 mln worth of Indian bonds on April 19
