MUMBAI: The Indian rupee is expected to open slightly higher against the US currency on Thursday, tracking an uptick in most Asian currencies despite an overnight surge on the dollar index.

The non-deliverable forwards indicated that the rupee will open at 82.70-82.75 to the dollar, compared with 82.8025 in the previous session. The local currency on Wednesday managed to hold above the closely watched 82.90-83.00 level despite mounting concerns over US interest rates.

Wednesday’s session will reinforce the belief that it is quite difficult for USD/INR to move above the 83 level, a trader at a Mumbai-based bank said.

Add to that the trade data and it looks like USD/INR may be headed to the lower side of its recent range, the trader said. India’s merchandise trade deficit in January hit its lowest in a year at $17.75 billion, data showed.

“The combination of falling goods deficit, downward historical revisions (smaller deficits than estimated earlier) and the rising services surplus has a positive implication for current account dynamics,” Barclays said in a note to clients.

The rupee’s Asian peers rose on Thursday, helped by an uptick in Asian shares and US equity futures.

The dollar’s jump against major peers overnight, following the US retail sales data did not have an impact on Asian currencies or equities.

Indian rupee to weaken on bets of more Fed rate hikes, RBI in focus

The dollar index climbed a six-week peak after US retail sales witnessed a sizeable rebound in January following two straight monthly declines.

The two-year Treasury yields initially jumped to near 4.70%, the highest since November, before pulling back.

The Federal Reserve terminal rate expectations at near 5.25%.

Retail sales now add to a slew of robust US data for January, which include non-farm payrolls and inflation, and this could support short-term US rate expectations, DBS Group Research said in a note.