MUMBAI, Sept 17 (Askume) – The Indian rupee opened nearly unchanged on Tuesday as traders expected the currency to trade in an increasingly narrow range ahead of the Federal Reserve’s policy decision this week.
The rupee opened at 83.87-83.88 against the dollar in the one-month non-deliverable forward contract, slightly different from Monday’s close of 83.8875.
Asian currencies got a boost on Wednesday as the possibility of further interest rate cuts by the Federal Reserve increased, while the rupee declined against the rupee due to sustained demand for the dollar from local importers and possible action by the Reserve Bank of India, according to traders.
Public sector bank bids (USD/INR) were at 83.85, a foreign bank trader said.
The trader said dollar buying may be related to customer flows, but the continued rise in the Reserve Bank of India’s foreign exchange reserves also shows that the central bank is absorbing dollars.
As of September 6, India’s foreign exchange reserves rose to a record high of $689.2 billion, central bank data showed.
The U.S. dollar index fell 0.4% to 100.6 on Monday, and the probability of the Federal Reserve cutting interest rates by 50 basis points rose to 67% from 50% on Friday, according to CME’s FedWatch tool.
U.S. bond yields remained low while most Asian currencies rose, with the South Korean won gaining the most, up 0.8%.
“The US retail sales data due later today could be crucial and help settle the ongoing debate on whether the Fed should cut interest rates by 25 basis points or 50 basis points,” MUFG Bank said in a note.
key indicators:
** One month non-payable rupee advance is 83.97; Domestic 1 month advance premium is 10.50 paise
**USD index is at 100.67
** Brent crude futures rose 0.3% to $73 a barrel.
** Ten-year US Treasury bond yield is 3.62%
