By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee is likely to inch up at open on Thursday, adding to the previous day’s advance, spurred by the dollar’s decline on worries that growth in the world’s largest economy is slowing.
The one-month non-deliverable forward indicated that the rupee will open at 86.88-86.90 to the U.S. dollar compared with its previous close of 86.9550.
The rupee rose 0.2% on Wednesday, its biggest one-day jump in more than three weeks. The dollar index dropped 1%, taking its decline this week to 3%.
“The dollar is all sorts of trouble.. U.S. growth risks are rising and the U.S. tariffs risk premium is being taken out,” a currency trader at a Mumbai-based bank said.
“This is obviously a welcome break for the rupee. However, I doubt that a substantial rally from here is likely.”
U.S. private payrolls growth slowed considerably in February, data released on Wednesday showed, indicating that the labour market is cooling off.
The private payrolls data follows a string of disappointing data, including a slump in U.S. consumer confidence in January, along with a steep in retail sales.
Monday’s U.S. manufacturing activity data showed big falls in new orders and employment.
“Markets have seemingly shifted their focus away from tariff rhetoric for now, and they appear to be concerned about a slowdown in the U.S. economy,” MUFG Bank said in a note.
The rally in the euro on the back of aggressive defensive and infrastructure spending plans by European leaders has further undermined the dollar. The euro has the highest weightage in the dollar index.
Meanwhile, dollar-rupee forward premiums will be in focus, after the Indian central bank announced yet another buy-sell FX swap to shore up rupee liquidity.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 87.12; onshore one-month forward premium at 19.25 paisa
** Dollar index down at 104.22
** Brent crude futures up 0.7% at $69.8 per barrel
** Ten-year U.S. note yield at 4.32%
** As per NSDL data, foreign investors sold a net $404.7 million worth of Indian shares on March 4
** NSDL data shows foreign investors sold a net $44.6 million worth of Indian bonds on March 4
(Reporting by Nimesh Vora; Editing by Varun H K)
