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INDIA RUPEE-Rupee poised to weaken as Fed rate cut expectations recede more -March 14, 2024 at 10:54 pm EDT


MUMBAI, March 15 (Reuters) – The Indian rupee is set to
open lower on Friday after fresh data showed that U.S. inflation
was proving sticky, prompting investors to dial back
expectations on Federal Reserve’s rate cuts this year.

Non-deliverable forwards indicate rupee will open
at 82.94-82.96 to the U.S. dollar compared with its previous
close of 82.8175.

“It appears we will have quite a decent up move on USD/INR
in the context that how muted the opening usually is,” a
currency trader at a bank said.

“This return to near-83 will take a lot of people by
surprise, and there will be a run to manage positions,” the
trader added.

Following the higher-than-expected U.S. producer price index
(PPI) print, investors have scaled back expectations on Fed rate
cuts this year to 75 basis points. This is in-line with what the
U.S. central bank’s December dot plot had indicated.

U.S. yields jumped, equities declined and the dollar index
rose.

The PPI reading came on the back of data that showed U.S.
consumer price index (CPI) in February rose more than expected.
The January CPI data too had surprised on the upside.

Following the CPI prints in January and February, the PPI
data renewed fears of sticky inflation, signalling that cost
pressures for firms have picked up, ANZ said in a note.

The U.S. jobless claims data further contributed to
expectations that the Fed may hold rates higher for longer. U.S.
initial jobless rose 209,000, lower than the 218,000 expected,
reinforcing the U.S. labour market’s resilience.

The Korean won led losses in broader Asian FX, down nearly
1% while Hong Kong shares led Asian equities lower.

KEY INDICATORS:

** One-month non-deliverable rupee forward at
83.04; onshore one-month forward premium at 7.5 paisa

** Dollar index up at 103.46

** Brent crude futures down 0.2% at $85.3 per barrel

** Ten-year U.S. note yield at 4.29%

** As per NSDL data, foreign investors bought a net $1,759
mln worth of Indian shares on March 13

** NSDL data shows foreign investors bought a net $97.7 mln
worth of Indian bonds on March 13
(Reporting by Nimesh Vora; Editing by Varun H K)



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