By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee is likely to open slightly higher on Tuesday, buoyed by expectations of dollar inflows helping the domestic currency navigate a decline in Asian peers.
The 1-month non-deliverable forward indicated that the rupee will open at 85.56-85.58 to the U.S. dollar, compared with 85.6350 in the previous session.
The currency is currently on an eight-day rally, reaching its year-to-date high on Monday. The final month of India’s fiscal year, March, typically witnesses higher dollar inflows due to intercompany borrowings and the repatriation of accumulated profits.
It can be “safely said that the pace and size” of the rupee rally “has surprised all”, a currency trader at a bank said, adding that paring of the rupee’s bearish positions has played a significant role.
“I had thought 86 will be the floor (on dollar/rupee) and Reserve Bank of India would buy there. That has not happened.”
The rupee has further benefited from the recovery of Indian equities and the return of foreign investors. The Nifty 50 Index rallied 4% last week and added 1.3% on Monday.
According to preliminary data, foreign investors acquired over $350 million worth of Indian shares on Monday, building on over $1 billion invested in the preceding two trading days. This represents a notable shift from prior periods of outflows.
ASIA FX AND TRUMP
Asian currencies were down on the day, assessing U.S. President Donald Trump’s comments on tariffs. Trump indicated that not all of his threatened levies would be imposed next week and some countries may get breaks.
“While these pronouncements are softer relative to what was mentioned previously, in absolute terms we do not yet know the exact level of tariff increases. We would remain cautious on how risk sentiment on Asian currencies develops from here,” MUFG Bank said in a note.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 85.88; onshore one-month forward premium at 31.75 paise
** Dollar index up at 104.33
** Brent crude futures flat at $73 per barrel
** Ten-year U.S. note yield at 4.33%
** As per NSDL data, foreign investors bought a net $610.5mln worth of Indian shares on Mar. 21
** NSDL data shows foreign investors bought a net $91.7mln worth of Indian bonds on Mar. 21
(Reporting by Nimesh Vora; Editing by Rashmi Aich)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibility for its content.