Rupee`s downtrend may pause; traders eye RBI decision, US jobs data
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The Indian rupee is likely to open little changed on Wednesday amid mixed Asian cues, while awaiting the Reserve Bank of India's (RBI) interest rate decision and the U.S. jobs report later this week.
The one-month non-deliverable forward indicated that the rupee will open nearly unchanged from 84.6850 in the previous session.
On Tuesday, the currency dropped to a lifetime low of 84.7575 before recovering slightly amid the RBI's intervention via the forwards market and dollar sales by foreign banks.
In light of Tuesday's price action, "the bias is on the downside (for the dollar/rupee)", a currency trader at a bank said.
"I see a few factors that will be of help to the rupee - equity outflows have abated, the yuan decline for now has paused near 7.30 and the RBI may have put in a top (for the dollar rupee) at 84.75-84.80."
Having moved near 84.20 more than a week ago, the rupee has seen a quick decline since then, by its standard, to the current level. That has pushed its Relative Strength Index, a momentum indicator, past 70, indicating that the rupee is oversold.
ASIAN CURRENCIES MIXED
The Korean won was down nearly 1% on Wednesday, the worst performer by a margin, amid political upheavals in the country. South Korean President declared martial law on Tuesday, which he later reversed. The nation's equity gauge was down almost 2% on the day.
On the other hand, the offshore Chinese yuan was on a recovery path, inching up to 7.2880 to the U.S. dollar.
All eyes are now on the U.S. non-farm payrolls data this Friday, which will likely prove a key variable on whether the Federal Reserve will cut rates at the Dec. 17-18 meeting.
Meanwhile, the RBI will make its rate decision on Friday amid disappointing India September quarter GDP data.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 84.80; onshore one-month forward premium at 13.5 paise
** Dollar index up at 106.42
** Brent crude futures at $73.7 per barrel
** Ten-year U.S. note yield at 4.23%
** As per NSDL data, foreign investors bought a net $448 million worth of Indian shares on Dec. 2
** NSDL data shows foreign investors bought a net $34.7 million worth of Indian bonds on Dec. 2
