Rupee may catch a breather after swift decline; softer dollar helps at margin
The Indian rupee may pause its recent slide at Wednesday’s open, with the quick fall expected to draw improved two-way interest, while the dip in the dollar index to a two-month low could offer support.
The 1-month non-deliverable forward indicated the rupee will open in the 90.96-91.02 range versus the U.S. dollar, having settled at 91.0275 on Tuesday.
The rupee fell 0.3% on Tuesday to a lifetime low of 91.0750, weighed by heavy dollar demand linked to NDF maturities and a lack of dollar supply.
It marked the fourth straight session in which the currency logged a fresh low, falling more than 1% over the period and underscoring the intensity of pressure it is facing.
The Indian currency is already down 1.8% month-to-date, making it the worst-performing major Asian currency. Several regional peers are higher on the month, while others have posted only marginal declines.
After the "heavy adjustment" seen in the rupee, two-way interest should improve from here, a currency trader at a Mumbai-based bank said.
The drop in the dollar and oil should "lend a hand" to the rupee, though those cues haven’t counted for much lately in a market that remains very flow-driven, he said.
The dollar index hovered near a two-month low on Wednesday, with U.S. jobs data for October and November failing to shift expectations of two Federal Reserve rate cuts next month.
U.S. non-farm payrolls increased by 64,000 last month, while the economy shed 105,000 jobs in October.
The U.S. jobs report provided very few clear signals and failed to clarify expectations for Fed cuts in 2026, Morgan Stanley said in a daily note.
Meanwhile, oil prices fell on Tuesday, with Brent crude slipping below $60 a barrel for the first time since May.
They ticked up in Asia trading after U.S. President Donald Trump ordered "a total and complete" blockade of all sanctioned oil tankers entering and leaving Venezuela.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 91.30/91.40; onshore one-month forward premium at 29.5 paise
** Dollar index up at 98.29
** Brent crude futures up 1.2% at $59.6 per barrel
** Ten-year U.S. note yield at 4.16%** As per NSDL data, foreign investors bought a net $63.8 million worth of Indian shares on Dec. 15
** NSDL data shows foreign investors bought a net $6 million worth of Indian bonds on Dec. 15
