MUMBAI: The Indian rupee, tracking non-deliverable forwards, is expected to decline slightly at open on Tuesday despite a recovery in Asian peers and the country a logging current account surplus for the first time in 10 quarters.
The one-month non-deliverable forward (NDF) indicate rupee will open at 83.48-83.50 to the US dollar compared with a close of 83.46 in the previous session.
Asian currencies rose and the dollar index retreated from multi-week highs. Brent crude, meanwhile, marched to the highest in nearly two months on supply worries.
“The slight opening up move (on dollar/rupee), which NDF is indicating, does not mean much,” a currency trader at a bank said.
“Yes, oil is higher. However, that has not been much of a factor of late. And definitely not right now, when we have the index inclusion.”
Indian bonds will be included in the widely tracked JP Morgan emerging market index on June 28, spurring inflows of near to $2 billion.
Current account surplus
India reported a current account surplus for the first time in 10 quarters in the January-March period, data released after market hours on Monday showed.
Indian rupee likely to struggle after upbeat US data boosts dollar
The turnaround to a surplus was primarily driven by a narrowing in the merchandise trade deficit, Aditi Nayar, chief economist at ICRA, said.
The merchandise trade deficit declined to $50.9 billion in the January quarter from $69.9 billion in the previous quarter.
ICRA expects India’s current account deficit in the current fiscal year to remain “eminently manageable at ~1.0-1.2% of GDP”.
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