MUMBAI, Sept 30 (Askume) – The Indian rupee opened nearly steady on Monday, paring marginal gains led by gains in most regional currencies, as traders awaited comments from Federal Reserve Chair Jerome Powell on rate cuts.
One-month non-deliverable forwards showed the rupee opened at around 83.68-83.70 against the dollar, almost unchanged from Friday’s close of 83.70.
Most Asian currencies were higher, led by Malaysia’s ringgit, which rose 0.5%, while the offshore yuan held above $7, close to its highest level since May last year.
Despite positive regional cues, traders expect the rupee’s gains to be capped due to month-end dollar demand from local importers.
The rupee was on track for its best monthly performance since January on the back of strong risk appetite and massive portfolio inflows after the Federal Reserve began a rate-cutting cycle.
Foreign investors have bought nearly $11 billion in local bonds and stocks so far in September, the highest monthly investment ever, according to stock depository data.
RBI can absorb dollar inflows,This helped the country’s foreign exchange reserves reach a record high of US$692.3 billion as of September 20 .
Powell’s comments on Monday will focus on determining the size of the Fed’s next rate cut, which is likely to come in November.
Investors will also closely monitor the situation in the Middle East after Israel stepped up attacks on Iranian-backed forces.
“For Asian currencies, the main transmission will be through the surge in oil prices, but this will be offset by Saudi Arabia’s potential moves to increase oil production and gain market share,” MUFG Bank said in a note.
key indicators:
** 1 month non-due rupee prepayment is 83.80 paise; 1 month domestic prepayment premium is 12.75 paise
**USD index is at 100.4
** Brent crude futures rose 0.8% to $72.6 a barrel.
** Ten-year US Treasury yield is 3.75%
** Foreign investors bought Indian shares worth $1.02 billion on September 26, according to NSDL data.
** Foreign investors sold Indian bonds worth $150 million on September 26, NSDL data showed.
