By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee is expected to open nearly flat on Thursday as comforting U.S. inflation data offset worries about an escalating global trade war that has hit risk appetite.
The 1-month non-deliverable forward indicated that the rupee will open at around 87.20-87.22, little changed from its close at 87.2075 in the previous session.
U.S. consumer prices increased less than expected in February but analysts reckon that the relief may prove to be transient against the backdrop of aggressive tariffs on U.S. imports.
Despite a softer than expected inflation print, traders reduced bets on rate cuts by the Federal Reserve this year and are now pricing in about 70 basis points of cuts in 2025, down from 76 bps on Wednesday.
“The Fed could remain patient with rate cuts while it seeks more clarity from (U.S. President Donald) Trump’s trade and fiscal policies,” MUFG Bank said in a note.
Meanwhile, India’s retail inflation fell below 4% in February for the first time in six months, giving the central bank room to cut rates further in coming meetings.
While lower rates would conventionally be a drag on the rupee, if equity flows pick up as a consequence, it could actually bring some relief to the currency, a trader at a Singapore-based bank said.
Persistent outflows from Indian stocks have been a sore point for the local currency. Foreign investors have offloaded more than $16 billion of local equities so far in 2025.
Asian currencies were mostly rangebound on Thursday while the dollar index was a tad lower at 103.5.
Uncertainty about U.S. trade policies has blunted the dollar’s safe-haven appeal and the greenback has declined more than 3.5% against major peers in March.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 87.42; onshore one-month forward premium at 20.75 paise
** Dollar index at 103.51
** Brent crude futures flat at $71 per barrel
** Ten-year U.S. note yield at 4.3%
** As per NSDL data, foreign investors sold a net $15.9 million worth of Indian shares on March 11
** NSDL data shows foreign investors bought a net $279.3 million worth of Indian bonds on March 11
(Reporting by Jaspreet Kalra)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibility for its content.