By Jaspreet Kalra
MUMBAI (Reuters) -The Indian rupee is likely to maintain its depreciation bias on Thursday even as traders anticipate the central bank’s interventions to avert sharp declines, while foreign portfolio outflows and concerns over U.S. policy shifts continue to weigh.
The 1-month non-deliverable forward indicated the rupee will open in the 88.74-88.77 range versus the U.S. dollar, compared with 88.69 in the previous session.
The local currency faced consistent pressure this month on concerns over steep U.S. tariffs on Indian exports and a U.S. visa fee hike that could threaten long-standing business models of Indian IT firms.
Given the headwinds, analysts at Bank of America have revised their year-end forecast for the rupee to 86 from 85.
A potential breakthrough in talks with the U.S. to lower tariffs “remains the key driver for INR for now as it holds the potential to derail the economic momentum by weighing on exports which could lead to portfolio outflows from equity markets,” the analysts said in a note.
Foreign investors have net sold $1.3 billion worth of local stocks over September so far.
While the rupee had fallen to a record low of 88.7975 on Tuesday, market interventions by the Reserve Bank of India helped it find its footing in the next session. Traders reckon that RBI interventions should help contain a speculative buildup against the currency.
Elsewhere, the U.S. dollar was steady against a basket of major currencies as traders weighed the prospect of a measured Federal Reserve easing cycle in the wake of cautious remarks from policymakers.
Money markets are currently pricing in a near 92% chance of a 25 basis point rate cut by the Fed next month.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 88.90; onshore one-month forward premium at 15.50 paisa
** Dollar index at 97.78
** Brent crude futures down 0.4% at $69.1 per barrel
** Ten-year U.S. note yield at 4.14%
** As per NSDL data, foreign investors sold a net $314.8mln worth of Indian shares on Sep. 23
** NSDL data shows foreign investors bought a net $17.4mln worth of Indian bonds on Sep. 23
(Reporting by Jaspreet Kalra; Editing by Harikrishnan Nair)
