By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee may look to extend its recent string of gains on Tuesday, as the dollar wallows near a 5-month low against its major peers amid fears of a slowdown in the world’s largest economy.
The one-month non-deliverable forward indicates that the rupee will open at around 86.75 to the U.S. dollar compared with its previous close of 86.80.
The rupee has strengthened for three consecutive sessions on the back of a softer dollar and a pick up in exporters’ activity ahead of the end of India’s financial year on March 31.
Concerns about U.S. President Donald Trump’s erratic trade policies have negatively impacted investors’ outlook on the United States and weighed on the dollar, which is down over 4% against major peers this month.
Softer economic data is starting to hint at the impact, with weaker-than-expected U.S. retail sales data for February reported on Monday, after a survey last week showed that consumer sentiment sunk to a near 2-1/2-year low in March.
Meanwhile, India’s merchandise trade deficit narrowed sharply to a more than 3-year low of $14.05 billion last month as imports fell amid rising global uncertainty.
“While this number in itself is positive for the Indian Rupee … if yesterday’s smaller trade deficit data is at least partly indicative of softer domestic demand trends in India, this may continue to weigh on equity and foreign capital inflows moving forward,” MUFG Bank said in a note.
Persistent outflows from local stocks have been a consistent drag on the local unit, with foreign portfolio investors having pulled out over $16.5 billion this year so far.
Expectations of rate cuts by the Indian central bank alongside uncertainty about the impact of reciprocal tariffs from the U.S. are likely to keep the rupee biased lower with weakness likely to be more front-loaded in the first half of 2025, MUFG Bank said.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 86.99; onshore one-month forward premium at 24 paisa
** Dollar index at 103.51
** Brent crude futures up 0.3% at $71.3 per barrel
** Ten-year U.S. note yield at 4.29%
** As per NSDL data, foreign investors sold a net $98.4 million worth of Indian shares on March 13
** NSDL data shows foreign investors bought a net $51.1 million worth of Indian bonds on March 13
(Reporting by Jaspreet Kalra; Editing by Varun H K)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibility for its content.
