By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee may open little changed to the dollar on Thursday as traders await the U.S. jobs report for cues on the size of the next Federal Reserve rate hike.
The non-deliverable forwards indicate the rupee will open around the previous session’s level of 82.0550.
The local currency had on Wednesday declined to near 82.30 after Fed Chair Jerome Powell’s hawkish comments. On Monday, the rupee reached a more-than-a-month high of around 81.60, helped by dollar inflows and position squaring.
The last two sessions have probably defined the near-term range on USD/INR, a trader with a Mumbai-based bank said. It is “abundantly clear” that the willingness to chase the pair higher has reduced and we should hold around 82 level till the U.S. jobs data, the trader added.
The Fed rate hike path is the key variable right now for the rupee and other Asian currencies.
Powell on Wednesday reaffirmed his message of higher and potentially faster interest rate hikes but noted that a decision would hinge on upcoming data. There are two important data points before the Fed’s March 21-22 meeting – the U.S. jobs report on Friday and the consumer inflation data on Tuesday.
The near-term macro environment is unfavourable for Asian currencies, DBS Group Research said in a note.
“Fed is clearly quite data-dependent and Fed expectations are expected to swing around with the data. Resulting U.S. short-rate volatility tends to lead to poor outcomes for Asia local currency,” DBS said.
Data out on Wednesday provided more support to the narrative that the U.S. labour market remained robust. U.S. job openings fell less than expected in January and data for the prior month was revised higher, while private payrolls increased more than expected in February.
The 2-year Treasury yield was hovering near its highest level since 2007.
KEY INDICATORS: ** One-month non-deliverable rupee forward at 82.22; onshore one-month forward premium at 15.75 paisa ** USD/INR NSE March futures settled on Wednesday at 82.1175 ** USD/INR March forward premium at 8.0 paisa ** Dollar index up at 105.64 ** Brent crude futures down 0.1% at $82.6 per barrel ** Ten-year U.S. note yield at 3.98% ** SGX Nifty nearest-month futures little changed at 17,791 ** As per NSDL data, foreign investors bought a net $105.9mln worth of Indian shares on Mar. 6
** NSDL data shows foreign investors bought a net $7.2mln worth of Indian bonds on Mar. 6
(Reporting by Nimesh Vora; Editing by Dhanya Ann Thoppil)
