scorecardresearchRupee likely to inch up on yuan, dollar index pullback

Rupee likely to inch up on yuan, dollar index pullback

Updated: 22 Nov 2022, 08:21 AM IST
TL;DR.
The rupee is expected at around 81.70-81.75 per dollar, compared to 81.84 in the previous session. The local unit has traded in an 81.40-81.90 range over the last three sessions.
A delivery worker counts Indian rupee banknotes in Mumbai, India, on Wednesday, July 20, 2022. The rupee slid to all-time low of 80.06 per dollar on Tuesday, and has lost 2.4% over the past month, the third-worst performing Asian currency over the period. Photographer: Dhiraj Singh/Bloomberg

A delivery worker counts Indian rupee banknotes in Mumbai, India, on Wednesday, July 20, 2022. The rupee slid to all-time low of 80.06 per dollar on Tuesday, and has lost 2.4% over the past month, the third-worst performing Asian currency over the period. Photographer: Dhiraj Singh/Bloomberg

(Reuters) - The Indian rupee is tipped to open slightly higher against the U.S. dollar on Tuesday on the back of the recovery in the Chinese yuan.

The rupee is expected at around 81.70-81.75 per dollar, compared to 81.84 in the previous session. The local unit has traded in an 81.40-81.90 range over the last three sessions.

It can be "safely assumed" that this is the new range, plus or minus 20 paisa on either side, a trader at a Mumbai-based bank said.

For the rupee to fall significantly below 82, we will have to see a "renewed big uptrend" on the dollar, which at present looks like a low probability outcome, the trader said.

The offshore Chinese yuan was up about 0.3% to the dollar at 7.1574, recouping Monday's losses. The dollar index dipped 0.2% to near 107.50 on the day.

Investors are currently focussed on China's response to new COVID-19 flare-ups and its impact on the outlook for Asia's largest economy.

Additionally, investors are looking to assess how high U.S. interest rates will reach and whether the Federal Reserve will slow down its pace of rate hikes.

In recent sessions, the optimism on the Fed outlook has faded a bit, with the dollar index inching up. Near-maturity Treasury yields have recovered a part of the decline, fuelled by the softer U.S. inflation data, with the 2-year now above 4.50%.

Meanwhile, it was a volatile session for oil. Prices plunged by more than $5 a barrel overnight after the Wall Street Journal reported an increase of up to 500,000 barrels per day will be considered at the OPEC+ meeting on Dec. 4.

Prices recovered after Saudi Arabia denied the media report.

 

First Published: 22 Nov 2022, 08:21 AM IST