MUMBAI, Sept 9 (Askume) – The Indian rupee is expected to open weak on Monday, tracking losses in Asian shares and currencies due to concerns about a slowdown in the U.S. economy.
The rupee opened at 83.97-83.98 against the US dollar in one-month non-deliverable forward, while it had closed at 83.9475 in the previous session. The rupee remained close to the 84 mark for most of the last week and hit a record low of 83.9850 on Thursday.
The Reserve Bank of India may have intervened several times last week to support the rupee.
“Will the RBI allow 84? Will a move above that lead to bigger moves and increased volatility?” asked a currency trader at a bank.
“It’s impossible to know what the RBI will do. If they allow 84, I doubt it will lead to any major breakthrough.”
Asian shares and currencies fell on Friday as a sell-off in US stocks followed amid concerns about US growth prospects.
Investors digested the US jobs report, which did not provide expected clarity on the size of rate cuts by the Federal Reserve at its meeting next week.
The US economy added fewer jobs than expected in August, raising concerns about a slowdown in the labour market and its impact on the economy. However, the unemployment rate improved slightly.
After the report was released, there was a one-third chance of a 50 basis point rate cut and a two-thirds chance of a 25 basis point rate cut, which were virtually unchanged before the employment data was released.
ANZ Bank said in a report that comments from a Federal Reserve spokesman on Friday indicated policymakers have little interest in cutting interest rates by 50 basis points.
Overall, the US jobs data “provided no conclusive evidence of a deterioration in labor market conditions” and downplayed the possibility that the Fed would “strongly” start an easing cycle.
key indicators:
** One month non-deliverable rupee forward rate is 84.06; onshore one month forward premium is 8 paise
** US dollar index rises to 101.24
** Brent crude futures rose 1.3% to $72 a barrel
** Ten-year US Treasury yield is at 3.74%
** Foreign investors sold Indian shares worth a net $107.7 million on September 5, according to NSDL data.
** NSDL data showed foreign investors sold a net $6.2 million worth of Indian bonds on September 5
