The Indian rupee will likely rebound on Monday as a result of a drop in US rates and a reduction in the dollar after the U.S. economy listed fewer jobs than what was predicted.
Non-deliverable forwards point out that the rupee will open at around 82.70 to the U.S. dollar, analogous to 82.84 in the previous session.
The dollar index retreated 0.4% on Friday. Asian currencies started the week on a higher note.
According to a foreign exchange dealer, the rupee will be relieved “to some extent” at the open, with the dollar broadly down.
“This means there is no threat to the 83 handle being taken out today. We now move on to the U.S. inflation data and the RBI (Reserve Bank of India).”
The 10-year U.S. gains decreased by 12 basis points on Friday as U.S. nonfarm payroll growth came in slightly below economists’ forecasts and job listings for the past two months were revised down.
The 2-year U.S. profit fell while the already low odds of a Federal Reserve rate hike fell more in September.
However, Friday’s report did have points that could cast doubt on whether the Fed will be on pause thereafter. The unemployment rate fell, while pay growth shocked on the upside, indicating that the labor market in the United States remained strong.
“A mixed outcome, which doesn’t rule out further rate hikes from the Federal Reserve, but doesn’t give the central bank the all clear on inflation risks either,” ING Bank wrote in a note.
Meanwhile, U.S. consumer inflation data and the RBI policy decision will be announced on Thursday. An in-line or softer-than-expected reading will increase the likelihood of a Fed pause.
PRIMARY INDICATORS:
- Non-deliverable one-month rupee future at 82.76; ashore one-month forward premium at 7 paisa
- On Friday, the USD/INR NSE August futures settled at 82.8975.
- The USD/INR forward premium for August is 5.5 paisa.
- The dollar index is at 102.05 points.
