Nimesh Vora
MUMBAI (Reuters) – The Indian rupee is expected to open marginally higher on Monday as the dollar weakens against major currencies ahead of U.S. inflation data.
Non-deliverable forwards suggest the rupee will open around 82.99-83.01 to the dollar, up from 83.0350 rupees. The dollar index fell to 103.99 as several Asian markets were closed for the holiday.
The rupee is coming off a weak week in which it was in the range of $82.88-$83.07.
“Last week’s range is likely to be around 10 paisa on either side of 83.00 paisa, at least until the US inflation figures are known,” said a foreign exchange trader at a bank.
“After the data, the range will not increase significantly and will probably be only 20 paisa on either side.”
Data released on Tuesday is expected to show U.S. consumer prices rose 0.2% month-on-month, while the more important core index rose 0.3%.
The data comes after strong U.S. jobs data and repeated pushback from Federal Reserve officials over impending interest rate cuts. All of this has led to a significant dampening of expectations for a rate cut at the March meeting.
The U.S. Department of Labor released its annual consumer price index revisions on Friday. December’s headline inflation rate was revised downwards, and both November and October’s prints were revised slightly upwards.
“This correction does not change the pace of disinflation and is therefore unlikely to change the Fed’s view,” ANZ said in a note.
“Future inflation data will be key given that most Fed directors want more evidence of inflation progress before cutting rates.”
Meanwhile, India’s December inflation data will be released later in the day, with retail inflation expected to rise by 5.09%, the slowest pace in three months.
Key indicators: ** 1-month non-deliverable rupee forward at 83.06. Onshore 1-month futures premium is 8 paisa ** Dollar index is 103.99 ** Brent crude oil futures are down 0.4% to $81.8 per barrel ** 10-year US note yield is 4.18%
** Foreign investors made net sales of $487.5 million worth of Indian stocks on February 8, according to NSDL data.
** Foreign investors bought a net worth of $319.9 million worth of Indian government bonds on February 8, according to NSDL data.
(Reporting by Nimesh Vora; Editing by Eileen Soreng)
