By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee is likely to open little changed to the U.S. dollar on Wednesday amid an uptick in most Asian currencies and a rally in oil prices.
Non-deliverable forwards indicate the rupee will open nearly unchanged from the previous close of 83.1925.
Brent crude reached a high of $81.72 during the New York session on Tuesday, the highest this month, amid Red Sea vessel attacks.
Brent is now up nearly 11% from the mid-December lows.
“Well, you can say, oil is a bit of an issue (for the rupee) at the margin,” said a forex trader at a bank.
Having said that, it is not much of a factor in the current scenario, the trader said, adding a quiet session awaits the domestic currency around the 83.20 handle.
The rupee’s range has narrowed considerably in the wake of likely heavy intervention by the Reserve Bank of India on both sides. The currency’s realised volatility is at a multi-year low.
Asian currencies were quoting mostly higher, supported by bets that the U.S. Federal Reserve will likely cut rates at its March meeting.
Investors have priced in nearly six rate cuts next year, double of what Fed policymakers have forecast.
The Fed outlook has boosted risk appetite with the S&P 500 Index approaching a record high. Indian equities have managed a 6.5% rally in December on the back of foreign inflows worth $9.5 billion.
The dollar index was near 101.50, hovering near the lowest since July. The index has declined 1.8% in December, adding to the 3% drop in November.
KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.26; onshore one-month forward premium at 7.75 paisa ** Dollar index at 101.48 ** Brent crude futures at $80.9 per barrel ** Ten-year U.S. note yield at 3.88% ** As per NSDL data, foreign investors sold a net $69.2mln worth of Indian shares on Dec. 22
** NSDL data shows foreign investors bought a net $269.1mln worth of Indian bonds on Dec. 22
(Reporting by Nimesh Vora; Editing by Sohini Goswami)
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