MUMBAI, Sept 3 (Reuters) – The Indian rupee is expected to open higher on Wednesday, shrugging off weakness in Asian peers and soft risk sentiment, with market participants noting that the near-term depreciating bias has moderated to an extent.
The 1-month non-deliverable forward indicated the rupee will open in the 88.04 to 88.08 range versus the U.S. dollar, compared with 88.1550 in the previous session.
The rupee on Tuesday saw choppy price action, rising to an intraday high of 87.85 before slipping back past the 88 mark. Traders said the brief climb past 87.95, a key resistance level, signalled that near-term pressure on the currency had tempered.
“We will still see whippy price action. However, the bias near term is more balanced now than what it was before,” a trader at a private sector bank said.
The move to 87.85 on Tuesday was helped by one-off foreign bank flows and the “mildest of optimism” on U.S.-India trade, the trader said.
That optimism stemmed from India’s commerce minister saying he expects a U.S.-India trade pact to be finalised by November despite recent setbacks, the trader pointed out.
The remarks coincided with U.S. President Donald Trump’s comments that India had offered to cut its tariffs “to nothing.”
DOLLAR CLIMBS, EQUITIES SLIDE
The dollar index rallied 0.66% on Tuesday and inched higher in Asia on Wednesday. Asian currencies weakened against the dollar.
The dollar’s strength came amid a drop in U.S. and European equities and as long-dated European bond yields hit multi-year highs, with investors increasingly concerned about the fiscal situation.
(Reporting by Nimesh Vora; Editing by Mrigank Dhaniwala)
