MUMBAI, Sept 22 (Reuters) – The Indian rupee is poised for a weaker open on Monday, pressured by a post-Federal Reserve decision dollar rally and soft risk sentiment denting demand for the currency.
The 1-month non-deliverable forward indicated the rupee will open in the 88.18 to 88.22 range versus the U.S. dollar, compared with 88.09 in the previous session.
The rupee saw volatile moves last week amid Fed’s decision, lingering concerns over hefty U.S. tariffs and modest debt inflows. The currency traded in a 87.70 to 88.30 band through the week.
The odds are that range should largely persist, with risks skewed towards a break past 88.50 rather than a dip to 87.50, a currency trader at a Mumbai-based bank said.
The dollar/rupee’s topside will continue to meet central bank resistance, while the downside remains supported by underlying demand, he said.
The dollar index inched up to 97.80 in Asian trading, extending its post-Fed climb. The index had slipped to 96.22 immediately after Wednesday’s decision before staging a steady rally.
Analysts attribute the move to Fed Chair Jerome Powell’s cautious tone on rates, the run higher in U.S. yields and unwinding of short dollar positions. The 10-year U.S. yield, which briefly slipped below 4% on the day of the Fed decision, was last at 4.14%.
Asian currencies were mostly down while equities were mixed.
Adding pressure on the rupee on Monday will be a weak beginning for Indian equities, with focus on IT companies after the U.S. introduced a $100,000 fee for new H-1B visa applications.
Foreign inflows into Indian equities have been subdued, and the news is unlikely to improve sentiment, traders said.
Overseas investors have taken out $900 million from Indian equities so far this month.
** One-month non-deliverable rupee forward at 88.30; onshore one-month forward premium at 13.50 paise
** Dollar index up at 97.78
** Brent crude futures up 0.5% at $67 per barrel
** Ten-year U.S. note yield at 4.14%
** As per NSDL data, foreign investors bought a net $89.1mln worth of Indian shares on Sep. 18
** NSDL data shows foreign investors bought a net $75.3mln worth of Indian bonds on Sep. 18
(Reporting by Nimesh Vora; Editing by Mrigank Dhaniwala)
