MUMBAI: The Indian rupee is expected to find support from the Chinese yuan at Wednesday’s open while market participants remain vigilant for any news related to the India-Pakistan border, where tensions continue to simmer.
The 1-month non-deliverable forward indicated that the rupee will open marginally higher-to-flat to the US dollar from the close of 85.2625 in the previous session.
It was a choppy session for the rupee on Tuesday, with traders highly sensitive to any news related to India-Pakistan developments.
The Indian currency hit a year-to-date high during the day, before reversing course.
The rupee is likely in for another choppy session on Wednesday, according to a currency trader at a Mumbai-based bank.
He noted that the near-term range appeared well-defined between 85.00 and 85.70.
Pakistan warns of India strike
Pakistan’s information minister, Attaullah Tarar, said on Wednesday that the country has credible intelligence that India intends to launch a military strike within the next 24 to 36 hours.
Indian rupee hit by geopolitical jitters
This comes a day after the country’s defence minister said a military incursion by India was imminent. Tensions are high between the two countries amid India alleging Pakistani involvement in last week’s attack in Kashmir.
Meanwhile, most Asian currencies were firmer on Wednesday, with the offshore Chinese yuan trading at 7.2720 to the US dollar.
The dollar index (=USD) was little changed, remaining on track for its worst monthly performance in two and a half years, weighed down largely by concerns over President Donald Trump’s trade policy.
US data offered little support to the dollar.
The Conference Board’s US consumer confidence index sank to a half-decade low in April, while job openings dropped in March.
The dollar remains highly sensitive to both tariff-related news and US activity data, ING Bank said in a note.
