MUMBAI, Jan 29 (Reuters) – The Indian rupee is expected
to have a quiet opening on Monday with traders eyeing the
Federal Reserve’s monetary policy outcome and the presentation
of the Asian country’s federal budget later in the week.
Non-deliverable forwards indicate the rupee will
open flat-to-slightly weaker to the U.S. dollar, from 83.1150 in
the previous session.
The Fed’s policy decision is due on Wednesday, and the
Indian government will lay out the budget the next day.
Doubt that any of these two “will be a source of volatility”
and expect rupee to be in a 83-83.00 range, an FX trader at a
bank said.
“83-83.30 is a narrower range within the broader 82.80 to
83.40 range.”
It’s almost certain that the Fed will not make no change to
the policy rate amid the central bank wanting more evidence that
inflation is headed back to its medium-term target.
“The meeting should be “straightforward”, with Fed Chair
(Jerome) Powell having already pivoted at the previous meeting,
which was a surprise at the time, and no new economic or rate
forecasts will be released,” HSBC Bank said in a note.
“The focus will be on Chair Powell’s thinking about
potential changes to the Fed’s balance sheet and whether the
pace of QT (quantitative tightening) should slow, and if so
when?”
Heading into the meeting, investors are split on whether the
Fed will cut rates at the March meeting or wait. The
monthly U.S. jobs report due on Friday will be important in the
regard alongside the Fed outcome.
In terms of India’s budget, the “little bit impact” on the
rupee will be largely felt “through what happens to equities”,
the FX trader said.
Asian currencies were mostly range-bound after the U.S. core
personal consumption expenditures price index rose 0.2% in
December, in-line with expectations.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 83.21;
onshore one-month forward premium at 8 paise
** Dollar index nearly unchanged at 103.52
** Brent crude futures up 0.3% at $83.8 per barrel
** Ten-year U.S. note yield at 4.14%
** As per NSDL data, foreign investors sold a net $652.6mln
worth of Indian shares on Jan. 24
** NSDL data shows foreign investors bought a net $16.7mln worth
of Indian bonds on Jan. 24
(Reporting by Nimesh Vora; Editing by Sonia Cheema)
