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By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee is likely to open little-changed against the U.S. dollar on Thursday amid losses in Asian peers and as traders await the Reserve Bank of India’s policy decision.
Non-deliverable forwards indicated the rupee will open at around Wednesday’s level of 82 to the dollar or a tad higher. The local currency managed to climb past the psychological 82 level on Wednesday, reaching an over-three-week high of 81.90.
Dollar offers by foreign banks, likely for custodial clients, according to traders.
Near-term momentum favours the rupee “on margin”, a spot trader at a private sector bank said, but cautioned that important data points lined up through the week could fuel volatility on the rupee.
The Reserve Bank of India’s monetary policy decision was due later in the day, followed by U.S. non-farm payrolls report on Friday and the U.S. inflation report next week.
At around 10:00 a.m. IST the RBI is expected by most economists to raise rates by 25 basis points in the face of elevated core inflation and leave the door open for more rate increases.
A few economists bet that the central bank may opt for a pause amid financial stability worries.
A 25 basis rate hike is not fully priced in, the spot trader said, expecting the rupee to receive a “bit of a boost” if it happens.
Meanwhile, Asian currencies were weaker on the day despite another round of data that indicated that the Federal Reserve may prefer to hit a pause on its rate hike cycle.
The U.S. services sector slowed more than expected in March and U.S. private employers hired fewer workers than expected in March.
The dollar index reached a low of 101.40 overnight, the lowest in two months, and U.S. yields declined.
Rupee remains “at an advantage” in the macro environment seems supportive of pause in U.S. rates, Srinivas Puni, managing director at QuantArt Market Solutions, said.
KEY INDICATORS: ** One-month non-deliverable rupee forward at 82.10; onshore one-month forward premium at 14 paise ** USD/INR NSE April futures settled on Wednesday at 82.1250 ** USD/INR April forward premium at 8.0 paise ** Dollar index hovering near 102 ** Brent crude futures down 0.7% at $84.4 per barrel ** Ten-year U.S. note yield at 3.3%, it fell around six basis points on Wednesday
** SGX Nifty nearest-month futures down 0.2% at 17,598 ** As per NSDL data, foreign investors bought a net $67.8mln worth of Indian shares on Apr. 3
** NSDL data shows foreign investors sold a net $70mln worth of Indian bonds on Apr. 3
(Reporting by Nimesh Vora; Editing by Nivedita Bhattacharjee)
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