By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee will open marginally higher on Tuesday, with the intraday direction to be dictated by results of the country’s general elections.
Non-deliverable forwards (NDF) indicate the rupee will open at 83.08-83.10 to the U.S. dollar compared with 83.1425 in the previous session.
The uptick at open indicated by NDF “has got to do with the overall dollar weakness and hardly matter today”, a FX trader at a bank said.
The vote count trends will begin trickling in from 8:00 a.m. IST.
“Within a few hours, you will get a sense of whether the results back up what the exit polls have predicted. We will take it from there,” the trader said.
The rupee climbed to 82.9475 on Monday after exit polls forecasted a third term for Prime Minister Narendra Modi. However, broad dollar buying from foreign and public sector banks pulled the currency off highs.
Looking at “yesterday’s price action, you would have to say that it will be difficult” for rupee to hold above 83, another trader said.
Asian currencies rose and the dollar index dipped to 104 after U.S. manufacturing activity unexpectedly declined, remaining in contraction territory.
U.S. Treasury yields dropped and odds of a Federal Reserve rate cut at the September meeting rose.
KEY INDICATORS:** One-month non-deliverable rupee forward at 83.15; onshore one-month forward premium at 6.75 paise
** Dollar index at 104.08** Brent crude futures down 0.6% at $77.9 per barrel** Ten-year U.S. note yield at 4.41%
** As per NSDL data, foreign investors bought a net $261.4 mln worth of Indian shares on May 31
** NSDL data shows foreign investors sold a net $79.4 mln worth of Indian bonds on May 31
(Reporting by Nimesh Vora; Editing by Mrigank Dhaniwala)
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