Rupee to open slightly stronger as US yields, crude prices take a breather
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The Indian rupee is likely to open slightly stronger on Friday aided by a pullback in U.S. treasury yields and steady crude oil prices.
Non-deliverable forwards indicate the rupee will open at around 83.14-83.15 against the U.S. dollar compared with a close of 83.1850 in the previous session.
The 10-year U.S. treasury yield eased to 4.59% in Asia after climbing to 4.68% on Thursday, its highest level since October 2007. The two-year U.S. treasury yield was also lower at 5.07%.
The rupee is likely to see another trading session held in a tight range, a foreign exchange trader at a state-run bank said. Dollar demand is persistent but "upside is limited on account of likely central bank intervention above 83.25 levels".
Brent crude oil futures were little changed in Asia trading at $95.43 after rising above $97 on Thursday.
"There is likely reluctance amongst participants to push too much higher right now with the market clearly in overbought territory," ING Bank stated in a note, referring to the recent rally in crude oil prices.
While India fell short of inclusion in FTSE Russell's emerging market government bond index, the country remained on a watch list.
"Areas for improvement in the Indian government bond market structure highlighted by international investors remain largely unchanged from the previous March 2023 review," FTSE said on Thursday.
The dollar index was lower in Asia at 106.02 and off its 10-month highs hit earlier in the week. Asian currencies were trading mixed but the offshore Chinese yuan was up 0.13%.
Investors are keeping an eye on U.S. core personal consumption expenditure numbers due later in the day, which will provide cues on the country's inflation trajectory.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 83.21; onshore one-month forward premium at 12.25 paise
** USD/INR NSE October futures settled at 83.2925 on Thursday
** USD/INR October forward premium at 11 paise
** Dollar index down at 106.02
** Brent crude futures up 0.1% at $95.4 per barrel
** Ten-year U.S. note yield at 4.6%
** As per NSDL data, foreign investors sold a net $263.1mln worth of Indian shares on Sep. 27
** Foreign investors sold a net $28.2mln worth of Indian bonds on Sep. 27, the data shows
