MUMBAI: The Indian rupee is likely to open little changed on Monday, after hitting an all-time low in the previous session, and could log modest gains after the dollar retreated from a two-year peak in light of a lower-than-expected US inflation print.
The 1-month non-deliverable forward indicated that the rupee will open near 85.02-85.03 to the US dollar compared with its close at 85.0150 in the previous session.
The rupee declined to its all-time low of 85.10 early on Friday but recovered slightly by close aided by dollar inflows.
While the global cues are on the “positive side for the rupee,” on Monday, it may be hard for it to hold on to sizeable gains above 85 in the face of month-end importer dollar bids, a trader at a state-run bank said.
The dollar index was at 107.7 after declining 0.5% on Friday following data which showed that the US core personal consumption expenditures price index rose 0.1% in November, lower than 0.2% rise anticipated by economists.
The dollar index is on course for an over 5% yearly gain boosted by a hawkish turn in the Federal Reserve’s interest rate outlook and anticipation that policies under the incoming Trump administration in the US could be inflationary.
Indian rupee ends little changed
Asian currencies were mostly higher on the day with the Malaysian ringgit up 0.6% and leading gains while the offshore Chinese yuan dipped 0.1%.
“We could yet see the dollar buying peter out as we enter the quiet Christmas / year-end period of trading. There is certainly an increased risk that you see some lightening of positioning ahead of the close of the year,” MUFG Bank said in a note.
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