Rupee to receive help from pullback in US yields, relief for Asia FX
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The Indian rupee will be supported on Wednesday by the dip in U.S. Treasury yields and a reprieve for its Asian peers.
The one-month non-deliverable forward indicated the rupee will open flat to marginally higher than its close of 84.0750 per U.S. dollar in the previous session.
The 10-year U.S. Treasury yield retreated, having hit a four-month high on Tuesday, and the dollar index inched lower. Asian currencies were range-bound.
"All this (the soft dollar) will do is very slightly make it (dollar/rupee) a bit less bid, nothing more," a currency trader at a bank said.
"We all know it will be a 1-2 paisa kind of range."
Over the last two weeks, the largest intraday range on the rupee has been just 7 paisa and on most days the currency has barely budged.
The Reserve Bank of India has been offering dollars via public sector banks to support the rupee and, in the process, has completely killed volatility, traders said.
"This episode of RBI intervention is different in the sense that at least previously there would be some volatility. Right now, it is next to zero," a treasury official at a bank said.
US DATA MIXED
Data on Tuesday showed that U.S. job openings fell to 7.443 million last month, a 3-1/2 year low, suggesting that the labour market was cooling, a development that the Federal Reserve has indicated it does not want.
U.S. interest rate swaps added 5-6 basis points of implied Fed cuts over the next year.
U.S. consumer confidence, on the other hand, exceeded estimates.
Meanwhile, investors' focus remains squarely on the U.S. elections on Nov. 5. Betting markets show Republican candidate and former President Donald Trump a favourite to win, an outcome that would push U.S. yields higher and lift the dollar.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 84.17; onshore one-month forward premium at 9 paisa
** Dollar index up at 104.26
** Brent crude futures up 0.4% at $71.4 per barrel
** Ten-year U.S. note yield at 4.25%
** As per NSDL data, foreign investors sold a net $250.9 mln worth of Indian shares on Oct. 28
** NSDL data shows foreign investors sold a net $17.2 mln worth of Indian bonds on Oct. 29
