10-04-2024 08:45 AM | Source: Reuters
Rupee set to open higher as US yields fall before inflation data

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The Indian rupee is poised to open higher on Wednesday helped by the dip in U.S. Treasury yields ahead of the release of the key inflation data in the world's largest economy.

Non-deliverable forwards indicate rupee will open at 83.22-83.24 to the U.S. dollar compared with 83.3150 in the previous session.

Most Asian currencies rose on the back of the slight pullback in U.S. Treasury yields. U.S. March consumer inflation data is due later in the day.

The rupee's near-term outlook has turned positive and with Asia cues broadly supportive, the 83.20-83.25 level will be revisited, an FX trader at a bank said.

"Then it will be down to whether we see the usual importer activity," he said.

Importers had stepped in when the dollar/rupee pair dropped to near 83.20 on Monday.

The U.S. consumer price data will be closely watched for cues on whether inflation remains sticky or the disinflation process is on track. The data could provide clarity on the timing and scale of the Federal Reserve's interest rate cut this year.

Fed Chair Jerome Powell said he expects the U.S. central bank to cut rates this year. On the other hand, other Fed officials have in recent days called for caution on policy easing if inflation stalls out.

"We think the data will suggest that inflation pressures are waning slowly," ANZ Bank said in a note.

"The Fed want to see sustained evidence of disinflation and our base case is that the Fed will have sufficient data to proceed with rate cuts from July," ANZ said.

KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.32; onshore one-month forward premium at 7 paisa ** Dollar index at 104.11 ** Brent crude futures little changed $89.5 per barrel ** Ten-year U.S. note yield at 4.36% ** As per NSDL data, foreign investors bought a net $229.6mln worth of Indian shares on Apr. 5

** NSDL data shows foreign investors sold a net $194.9mln worth of Indian bonds on Apr. 5