By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee is likely to inch up on Monday, tracking an uptick in regional peers to kick off a week where the focus will be on news flow on U.S.
tariffs and economic data.
The 1-month non-deliverable forward indicated that the rupee will open at 87.40-87.42 to the U.S. dollar compared with 87.4950 in the previous session.
The Indian currency dropped 1% in February, logging its fifth straight monthly loss.
March is considered seasonally favourable for the rupee and the Indian currency may be able to pause its losing run, a currency trader at a bank said.
The rupee “will have to negotiate” the “always present” U.S.
tariff headline risk and “handle the effects” of the volatility that it will bring in, he said.
Last week, hedging demand, persistent equity outflows, and the usual market flows exerted downward pressure on the rupee.
Intervention by the central bank mitigated a potentially larger decline, per traders.
US TARIFFS, DATA
The attention is squarely focussed on U.S. President Donald Trump’s actions related to tariffs.
Trump last week indicated that tariffs on Canada and Mexico will come into effect on Tuesday and on the same day the rate of tariffs on Chinese imports will rise.
Trump had previously provided a last minute reprieve to Canada and Mexico.
Meanwhile, this week will see the release of U.S.
ISM manufacturing and services data and the non-farm payrolls data.
The string of key data releases comes in the backdrop of worries that the world’s largest economy is heading for a slowdown.
“If implemented, tariff risk offers upside risk for the broad USD, where this force may collide headfirst with U.S.
growth concerns. How these two forces pair off this week and impact the price action in the USD will be fascinating,” Chris Weston, head research at Melbourne-based broker Pepperstone, said.
KEY INDICATORS: ** One-month non-deliverable rupee forward at 87.66; onshore one-month forward premium at 19.5 paisa ** Dollar index dips to 107.20 ** Brent crude futures rises 0.4% to $73.44 ** Ten-year U.S.
note yield at 4.24% ** As per NSDL data, foreign investors bought a net $128 million worth of Indian shares on Feb 27
** NSDL data shows foreign investors bought a net $558 million worth of Indian bonds on Feb 27
(Reporting by Nimesh Vora; Editing by Mrigank Dhaniwala)
