Rupee to gauge uptick in US yields, Fed official`s cautious remarks
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The Indian rupee is likely to open slightly weaker on Friday after stronger-than-expected U.S. jobless claims data pushed U.S. bond yields higher and a Federal Reserve official reiterated the need for a cautious approach to potential rate cuts.
Non-deliverable forwards indicate the rupee will open at around 83.15-83.16 to the U.S. dollar, compared with its previous closing of 83.1225.
The dollar index was slightly lower at 103.33, with most Asian currencies holding steady, except for the Korean won, which inched up about 0.3%.
The rupee is expected to have a broadly range-bound day, with its support near 83.20-83.25 likely to hold on Friday, a foreign exchange trader at a private bank said.
But potential equity outflows could exert pressure on the rupee and would be key to monitor in the coming days, the trader added.
Overseas investors have net sold Indian equities worth $463 million in January, following net purchases of $7.9 billion in December.
The 10-year U.S. Treasury yield rose to 4.16% in Asia hours, climbing 4 bps overnight in New York following weaker-than-expected initial jobless claims data in the United States.
Claims for unemployment benefits dropped to 187,000 for the week ended Jan. 13, according to data released on Thursday, well below the 207,000 claims expected by economists polled by Reuters.
"These numbers point to a still firm labour market ... factor in a rebound in (U.S.) housing starts and firm retail sales from the day before, it becomes difficult to make a case for aggressive rate cuts this year," DBS Bank stated in a note.
Atlanta Federal Reserve President Raphael Bostic said on Thursday that premature rate cuts "could unleash a surge in demand," putting upward pressure on prices.
Bostic added that he remained open to early cuts if data convincingly signals a faster-than-expected fall in inflation.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 83.24; onshore one-month forward premium at 9 paisa
** Dollar index at 103.33
** Brent crude futures down 0.3% at $78.9 per barrel
** Ten-year U.S. note yield at 4.16%
** As per NSDL data, foreign investors sold a net $1.26 bln worth of Indian shares on Jan. 17
** NSDL data shows foreign investors bought a net $110.1 mln worth of Indian bonds on Jan. 17
