Rupee eyes US Treasury yields, awaits centralbank comments on liquidity
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The Indian rupee is expected to have quiet opening on Thursday, awaiting comments from the central bank on liquidity, while eyeing U.S. Treasury yields.
Non-deliverable forwards indicate the rupee will open nearly unchanged to the U.S. dollar from 82.9675 in the previous session.
The Reserve Bank of India's rate-setting panel in its policy decision, due at 10.00 a.m. IST, is unanimously expected to make no change to the key interest rate. Most economists expect the central bank to make no change to the "withdrawal of accommodation" policy stance.
"You mostly just know that the policy will not have much impact on the rupee. The commentary on liquidity will possibly cause a small bit of interest," a FX trader at a bank said.
Taking a 2-to-3 month view, what happens to the U.S. Treasury yields and how people want to be positioned before India's elections will be important for the rupee, he said.
On Wednesday, the rupee had its best day in just under a month, attributed largely to inflows.
"While momentum does not mean much right now, I had rather be short (on USD/INR) right now," a FX trader at a different bank said.
ASIA RANGEBOUND
Rupee's Asian peers were mostly rangebound amid small moves in U.S. Treasury yields and upbeat risk. The focus remained on timing of the Federal Reserve's first rate cut.
Fed officials yet again signalled they were in no rush to cut interest rates.
"An overall uniform message from Fed policymakers. The overarching message was one that acknowledged it would likely be appropriate to cut rates “later” or “at some point” this year," Morgan Stanley said in a note.
In wake of comments by policymakers and robust U.S. data, investors have scaled back bets on a Fed March rate cut.
KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.06; onshore one-month forward premium at 8.25 paisa ** Dollar index down at 104.00 ** Brent crude futures up 0.4% at $79.6 per barrel ** Ten-year U.S. note yield at 4.0850% ** As per NSDL data, foreign investors sold a net $56.9 mln worth of Indian shares on Feb. 6
** NSDL data shows foreign investors bought a net $380.6 mln worth of Indian bonds on Feb. 6
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