Rupee to rise slightly ahead of RBI decision, key US labour data

By Jaspreet Kalra

MUMBAI (Reuters) – The Indian rupee is likely to open slightly higher on Friday, following a further pullback on the dollar index ahead of the U.S. non-farm payrolls report.

Traders are also eyeing the Reserve Bank of India’s monetary policy decision and commentary.

Non-deliverable forwards indicate the rupee will open at around 83.21-83.22 to the U.S. dollar, compared with its previous close of 83.25.

The dollar index dropped below 106.50 on Thursday, slipping further away from year-to-date highs. The pullback was attributed to profit taking before the U.S. September jobs report.

Economists polled by Reuters expect job additions to slow to 170,000, and a slight dip in the unemployment rate. Average hourly wages are projected to rise 4.3% year-on-year.

“If in line with expectations, the data would be consistent with a gradual cooling in labour market pressure,” ANZ said in a note. A cooling labour market will make it more likely that the U.S. Federal Reserve will not hike rates any more.

The RBI, whose policy decision is due at 10:00 a.m. IST, is widely expected to keep rates on hold and focus will be on the inflation trajectory.

“The RBI’s constructive view on growth and uncertainty over the level of U.S. terminal rates are likely to keep the policy committee from exploring rate cuts this fiscal year,” DBS Bank stated in a note.

Analysts don’t expect the RBI’s monetary policy decision to have a major impact on the rupee.

“Market is well priced for the status quo,” said Dilip Parmar, a foreign exchange research analyst at HDFC Securities.

At open, the local unit may receive support from lower crude oil prices, Parmar added. Brent crude is down more than 11% this week.


** One-month non-deliverable rupee forward at 83.31; onshore one-month forward premium at 12.25 paisa

** USD/INR NSE October futures settled at 83.3425 on Thursday

** USD/INR October forward premium at 8.25 paisa

** Dollar index at 106.38

** Brent crude futures at $84.4 per barrel

** Ten-year U.S. note yield at 4.72%

** As per NSDL data, foreign investors sold a net $475.2 mln worth of Indian shares on Oct. 4

** NSDL data shows foreign investors sold a net $54.4 mln worth of Indian bonds on Oct. 4

(Reporting by Jaspreet Kalra; Editing by Varun H K)