Rupee back under pressure after US data helps dollar recover
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The Indian rupee is expected to open lower on Thursday after U.S. retail sales fell less than expected, helping the dollar recover from a plunge fuelled by softer-than-expected inflation data.
Non-deliverable forwards indicate rupee will open at around 83.20 to the U.S. dollar compared with its previous close of 83.1425.
The rupee had on Wednesday logged its best session in nearly two months.
The dollar index inched up to 104.50, Asian currencies dropped 0.2% to 0.6% and the 10-year U.S. Treasury yield was near 4.50%.
Rupee will be "back on the defensive after yesterday's mild reprieve" and "we probably see 83.30 are thereabouts revisited", a forex trader said.
"The trade data was not particularly helpful (for the rupee)," he added, referring to India's merchandise trade deficit reaching a record high of $31.5 billion in October.
U.S retail sales slipped 0.1% month-on-month in October compared to the 0.3% fall expected by economists polled by Reuters. Further, data for September was revised to show sales increasing 0.9% from 0.7% previously.
The data indicates "decent resilience" and supports our view that fourth-quarter GDP growth may not be as weak as the consensus is currently predicting, ING Bank said in a note.
The dollar drew additional support from comments by Federal Reserve officials. San Francisco Fed President Mary Daly warned against calling time on rate-rising cycle too soon, in an interview to Financial Times on Wednesday.
"Daly offered a glimpse into Fed policy thinking in 2024. She reminded markets that the Fed intends to keep rates very restrictive” for an extended period before “normalizing” them," DBS Research said in a note.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 83.24; onshore one-month forward premium at 4.25 paisa
** Dollar index up at 104.52
** Brent crude futures down 0.9% at $80.4 per barrel
** Ten-year U.S. note yield at 4.51%
** As per NSDL data, foreign investors sold a net $112.6 mln worth of Indian shares on Nov. 13
** NSDL data shows foreign investors bought a net $50.7 mln worth of Indian bonds on Nov. 13
