By Nimesh Vora
MUMBAI, March 28 (Reuters) – The Indian rupee is poised to open higher versus the U.S. currency, tracking the dollar’s broad losses on receding fears about the U.S. banking sector.
The non-deliverable forwards indicate the rupee INR=IN will open at around 82.18-82.20 to the U.S. dollar compared with 82.37 in the previous session.
The support level for the USD/INR “is pretty straightforward,” lying around 82.00-82.10, a trader at a Mumbai-based bank said. Last week’s low for USD/INR was 82.07, a level at which it ran into a “string of” dollar buying, he pointed out.
“Highly doubt 82-82.10 is at risk of being taken out today.”
Asian currencies were up 0.2% to 0.6% while the dollar index =USD declined to 102.60. A deal to buy the assets of Silicon Valley Bank (SVB) allayed concerns about the U.S. banking sector to an extent, undermining demand for the safe-haven dollar.
The S&P 500 Index inched up overnight and near-maturity Treasury yields jumped. A report over the weekend that U.S. authorities are considering the expansion of an emergency lending facility that would offer banks more support has helped risk.
Lower risk aversion prompted investors to reconsider expectations regarding the U.S. Federal Reserve’s rate path. The odds now are almost 50-50 on whether the Fed will hike rates by 25 basis points at the May meeting or opt for a pause. FEDWATCH
Futures are pricing in a Fed rate of around 4.20% by December this year. This had dropped below 4% at the peak of the U.S. banking turmoil.
The markets’ assessment of risk in the U.S. and Europe banking sectors will drive much of the swings in currencies this week, ING Bank said in a note.
Meanwhile, oil prices jumped overnight, a negative for the rupee. Oil prices rose more than $3 on Monday, with a halt to some exports from Iraq’s Kurdistan region adding to worries about oil supplies.
KEY INDICATORS:
** One-month non-deliverable rupee INRNDFOR= forward at 82.36; onshore one-month forward premium at 18 paise
** USD/INR NSE March futures settled on Monday at 82.3750
** Dollar index =USD down at 102.60
** Brent crude futures LCOc1 down at $77.9 per barrel
** Ten-year U.S. note yield at 3.51% after surging 16 basis points overnight
** SGX Nifty SINc1 nearest-month futures up 0.3% at 17,062
** As per NSDL data, foreign investors sold a net $177.1mln worth of Indian shares on Mar. 24
** NSDL data shows foreign investors bought a net $107.7mln worth of Indian bonds on Mar. 24
(Reporting by Nimesh Vora; Editing by Janane Venkatraman)
((nimesh.vora@tr.com))
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