Rupee weighs moderation in current account deficit, higher US yields
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The Indian rupee is likely to open little changed to the U.S. dollar on Wednesday amid a moderation in the current account deficit (CAD) and an uptick in U.S. yields.
Non-deliverable forwards indicate the rupee will open mostly unchanged from 82.0250 in the previous session.
India's CAD in the March quarter narrowed, helped by the moderation in the trade deficit and an increase in services exports.
The March quarter CAD was at $1.3 billion or 0.2% of the GDP, compared with a revised deficit of $16.8 billion or 2% of GDP in the preceding quarter.
For the current fiscal year that runs from April 1 to March 31, analysts peg India's CAD at 1% of the GDP.
"Current account dynamics are expected to improve on average in the current year," Barclays said in a note.
"Both export and import values are expected to soften owing to weak external demand and lower international commodity prices, leading to a narrower goods trade deficit compared to the previous fiscal year."
Asian currencies were down on Wednesday, pressured by the move up in U.S. yields following upbeat U.S. data.
New orders for U.S.-manufactured capital goods unexpectedly rose in May, data which analysts said, point towards robust investment demand.
Meanwhile, a measure of U.S. consumer confidence rose in June to its highest level in almost one-and-a-half years.
Asian currencies were down 0.1% to 0.5%. The offshore Chinese yuan, after Tuesday's respite, was down again to the dollar. The dollar index inched up.
"Based on the moves over the last few sessions, there will not be much of a response (on USD/INR) at open (to the fall in Asian currencies)," a forex trader said.
"Count on another quiet session."
KEY INDICATORS: ** One-month non-deliverable rupee forward at 82.10; onshore one-month forward premium at 8 paisa ** USD/INR NSE July futures settled on Tuesday at 82.0950 ** USD/INR July forward premium at 7.5 paise ** Dollar index up at 102.62 ** Brent crude futures up 0.4% at $72.5 per barrel ** Ten-year U.S. note yield at 3.77% ** SGX Nifty nearest-month futures up 0.3% at 18,859 ** As per NSDL data, foreign investors sold a net $42.6mln worth of Indian shares on June 26
** NSDL data shows foreign investors sold a net $96.9mln worth of Indian bonds on June 26
