Rupee to inch up after Powell’s speech, key US data eyed

By Nimesh Vora

MUMBAI (Reuters) – The Indian rupee is likely to inch up slightly on Monday following the U.S. dollar’s retreat from a three-month high after Federal Reserve Chair Jerome Powell’s comments at Jackson Hole.

Non-deliverable forwards (NDF) indicate rupee will open at around 82.56-82.58 to the U.S. dollar compared with 82.6475 in the previous session.

“We will proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data,” Powell said in his speech on Friday, delivered during U.S. trading hours.

He added that the Fed is “prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective”.

Powell signalled that the Fed will “tread carefully” while indicating the rates will stay high, ING Bank said.

The bank reckons the Fed will not hike again and that “rates had peaked and cuts will come in 2024”.

Near-maturity U.S. Treasury yields rose following Powell’s speech while longer maturity yields were mostly flat. The dollar index witnessed choppy price action and it was at 104.10 in Asia, down from the three-month high of 104.44.

“It will be a relief (for the rupee) that nothing major happened to the dollar after Powell’s speech,” a forex trader said.

The rupee “should benefit from the momentum from last week” in the absence of “any major moves post Powell”.

The rupee last week had its best session in more than a month, mainly due to the Reserve Bank of India’s direction to some banks to stop NDF arbitrage.

Focus this week will be on key U.S. data, with core PCE inflation, non-farm payrolls and ISM manufacturing all due.

KEY INDICATORS: ** One-month non-deliverable rupee forward at 82.64; onshore one-month forward premium at 8 paisa ** USD/INR NSE September futures settled on Friday at 82.74 ** USD/INR September forward premium at 9 paisa ** Dollar index down at 104.06 ** Brent crude futures down 0.1% at $84.4 per barrel ** Ten-year U.S. note yield at 4.24%

** As per NSDL data, foreign investors bought a net $267.2mln worth of Indian shares on Aug. 24

** NSDL data shows foreign investors sold a net $29.6mln worth of Indian bonds on Aug. 24

(Reporting by Nimesh Vora; editing by Eileen Soreng)