By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee’s intraday direction on Wednesday will be dictated by moves in the Asia FX space amid news on U.S. President Donald Trump’s tariffs.
The 1-month non-deliverable forward indicated that the rupee will open largely unchanged to the U.S. dollar from 87.2650 in the previous session.
Asian currencies were mixed on Wednesday, contending with headlines on U.S. tariffs. The U.S. and Canadian officials are in talks about reducing or lifting tariffs that Trump imposed and a deal may be reached on Wednesday, the Wall Street Journal reported.
Meanwhile, the New York Times reported that Trump has signalled privately he will stick with the tariffs.
The reports follow comments made by U.S. Commerce Secretary Howard Lutnick on Tuesday that Trump may reach a middle ground with Canada and Mexico on tariffs.
“You will have all these headlines on what Trump will now do.. and you need to be nimble on your positions,” a currency trader at a bank said.
“Keeping all the tariff noise aside, the direction of travel on (dollar/rupee pair) is on the upside. Looking to buy into dips to near 87.00-87.10 level, if we reach there.”
The rupee will be supported by the dollar’s struggles amid worries over the U.S. growth outlook. The dollar index has dropped by 2% over Monday and Tuesday and is hovering at a three-month low.
In response to mounting worries over U.S. growth, investors are betting that the Federal Reserve will be forced to deliver more rate cuts this year than previously expected.
“From speculating the Fed might hike rates just a couple of weeks ago to now pricing in three 25 basis points rate cuts this year and a 28% chance of a fourth 25 bps cut. Perceived US recession risks are rising,” ANZ Bank said in a note.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 87.47; onshore one-month forward premium at 20 paise
** Dollar index at 105.68
** Brent crude futures down 0.4% at $70.7 per barrel
** Ten-year U.S. note yield at 4.26%
** As per NSDL data, foreign investors sold a net $533.9mln worth of Indian shares on March 3
** NSDL data shows foreign investors bought a net $164.2mln worth of Indian bonds on March 3
(Reporting by Nimesh Vora; Editing by Eileen Soreng)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibility for its content.
