By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee is expected to open largely unchanged on Tuesday amid rangebound moves in Asian peers, ahead of Federal Reserve Chair Jerome Powell’s testimony.
Non-deliverable forwards indicate the rupee will open at 83.48-83.50 to the U.S. dollar, compared with 83.4925 in the previous session. The rupee has been locked in a broad 83.35-83.60 range for more than a month.
Fed Chair Powell is set to appear before Congress on Tuesday and Wednesday. Asian currencies were rangebound before his comments.
“To me, the risk is on the side of Powell being more dovish relative to expectations,” a currency trader at a bank said.
“That obviously should keep the dollar down and maybe, just maybe, we will be able to move out of this range (on dollar/rupee).”
Powell’s testimony comes on the back of a slew of U.S. data that has been on the softer side, fuelling confidence that the Fed will cut rates twice this year. The odds of a rate cut at the September meeting are now 3-in-4.
Last week, data showed that the U.S. unemployment rate climbed to a 2-1/2- year high and U.S. services sector activity slumped to a four-year low.
U.S. Treasury yields declined last week and the dollar index dropped nearly 1%.
Powell will “probably want to provide some assurance” that rates are likely to be on a downward path, though not indicate that the Fed “is cavalier” about cutting rates, ING Bank said in a note.
“A difficult balancing act, so markets will be on the watch.”
KEY INDICATORS:** One-month non-deliverable rupee forward at 83.55; onshore one-month forward premium at 7.75 paise** Dollar index at 105.02** Brent crude futures down 0.2% at $85.6 per barrel** Ten-year U.S. note yield at 4.28%** As per NSDL data, foreign investors bought a net $379.6 million worth of Indian shares on July 5
** NSDL data shows foreign investors bought a net $59.5 million worth of Indian bonds on July 5
(Reporting by Nimesh Vora; Editing by Sonia Cheema)
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