By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee is set to open higher on Wednesday following weak U.S. consumer confidence data that heightened anxieties regarding the U.S. economic trajectory.
The resumption of equity flows should provide an additional impetus to the rupee.
The 1-month non-deliverable forward indicated that the rupee will open at 85.62 to 85.64 against the U.S. dollar compared with 85.7550 in the previous session.
The Indian currency snapped a nine-day winning run on Tuesday, during which it has rallied by 2%. A predominantly softer dollar, the return of foreign capital to Indian equities, and the liquidation of bearish rupee bets contributed to the rise, per bankers.
Foreign investors acquired more than $600 million worth of Indian equities on Tuesday, resulting in inflows exceeding $2 billion in the last four trading days.
A currency trader at a Mumbai-based bank said Tuesday’s price action was an expected correction following the currency’s “super run-up”.
The trader expects buying interest on USD/INR dips and a range of 85.50 to 86 pending clarity on U.S. tariffs.
Next Wednesday, U.S. President Donald Trump will disclose the specific details of the tariffs he plans to implement.
WEAK US DATA
U.S. Treasury yields slipped on Tuesday, pressured by weak consumer confidence data and worries over the economic outlook amid the impending tariffs.
The U.S. Conference Board data showed that the consumer confidence index fell to a four-year low of 92.9, with households reporting the highest pessimism in 12 years.
The data indicated “potential future softness in consumer discretionary spending, which on our estimates represents around 20% of consumer expenditure,” ANZ Bank said in a note.
“Tariff anxiety is continuing to play a role in the elevated level of worry.”
KEY INDICATORS:
** One-month non-deliverable rupee forward at 86.02; onshore one-month forward premium at 31 paise
** Dollar index dips to 104.18
** Brent crude futures up 0.5% at $73.4 per barrel ** Ten-year U.S. note yield at 4.33%** As per NSDL data, foreign investors bought a net $723 million worth of Indian shares on March 24
** NSDL data shows foreign investors bought a net $15.7 million worth of Indian bonds on March 25
(Reporting by Nimesh Vora; Editing by Mrigank Dhaniwala)
