India rupee, perched near record low, to remain under pressure

By Jaspreet Kalra and Nimesh Vora

MUMBAI (Reuters) – The Indian rupee, hovering near a record low, is expected to remain under pressure amid focus on crude oil prices and the U.S. Federal Reserve’s policy decision.

Non-deliverable forwards (NDF) indicate rupee will open at around 83.25-83.29 to the U.S. dollar compared with 83.2675 in the previous session.

The local currency is within a whisker of the lifetime low of 83.29.

“You can make out from the price action that we are headed lower (on the rupee)”, a forex dealer at a bank said.

“Let’s see how swiftly (the record low) is taken out,” another trader said, adding that the rupee is likely to hold a negative tone through the session.

A few traders reckoned that it was possible that the Reserve Bank of India may have intervened in NDF market to defend the rupee.

Brent crude dropped below $94 in Asia, off the fresh year-to-date high it made on Tuesday of $95.96. The dollar index was down a tad at 105.08 and Asian currencies were mostly in a narrow range ahead of the Fed decision.

The Fed on Wednesday is widely expected to keep the policy rate unchanged with futures assigning a near zero percent probability of a rate hike.

What investors will be on the lookout for will be the central bank’s interest rate projections for 2023 and 2024.

“We expect the 2023 median policy rate forecast to show one more 25bps hike, for a terminal rate of 5.5-5.75%,” BofA Global Research said in a note.

“Perhaps the most important forecast is the 2024 median, which in our view will shift up by 25bps to 4.875%, reflecting just 75bp of cuts next year.”

KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.34; onshore one-month forward premium at 10 paise ** USD/INR NSE September futures settled at 83.3525 on Monday

** USD/INR September forward premium at 2 paise

** Dollar index at 105.08

** Brent crude futures down 0.7% at $93.6 per barrel

** Ten-year U.S. note yield at 4.36%

** As per NSDL data, foreign investors bought a net $36.2 mln worth of Indian shares on Sept. 15

** NSDL data shows foreign investors sold a net $65.5 mln worth of Indian bonds on Sept. 15

(Reporting by Nimesh Vora and Jaspreet Kalra; Editing by Mrigank Dhaniwala)