By Nimesh Vora
MUMBAI (Reuters) -The Indian rupee is expected to remain under pressure on Thursday, pegged back by a dollar that is finding support from expectations of thawing U.S.-China trade frictions and a calming of nerves around the Federal Reserve’s independence.
The 1-month non-deliverable forward indicated that the rupee will open at 85.52-85.54 to the U.S. dollar, compared to its previous close of 85.42. The Indian currency dropped 0.3% on Wednesday, logging its worst day in two weeks.
With the dollar “extended an helping hand” from the positive news flow on the tariff and Fed front, the attitude towards rupee long positions has soured, a currency trader at a bank said.
“This week’s price action has put in place a near-term bottom (for USD/INR pair) at the 85 level.”
The developments in Kashmir are not helping the rupee’s cause, he added.
The dollar index is inching back to the psychologically important 100 mark, driven by improving sentiment towards U.S. assets amid positive signals on both trade policy and Fed autonomy.
The Wall Street Journal reported on Wednesday that the White House is considering rolling back tariffs on Chinese goods to help dial down tensions with Beijing.
This followed recent comments from U.S. President Donald Trump and Treasury Secretary Scott Bessent, both of whom hinted at a potential de-escalation in trade frictions and suggested any future deal with China could involve tariff cuts.
“The dollar is enjoying support thanks to a recovery in U.S. market sentiment. At the moment, no other G10 currency has a higher beta than the dollar to U.S. trade news,” ING Bank said in a note.
Adding to the dollar’s support was a shift in tone from the White House regarding the Fed, with Trump backing away from earlier threats to remove Fed Chair Jerome Powell.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 85.70; onshore one-month forward premium at 17.5 paisa
** Dollar index at 99.64
** Brent crude futures at $66.1 per barrel
** Ten-year U.S. note yield at 4.36%
** As per NSDL data, foreign investors bought a net $230.9 million worth of Indian shares on April 22
** NSDL data shows foreign investors sold a net $93.5 million worth of Indian bonds on April 22
(Reporting by Nimesh Vora; Editing by Varun H K)
