Rupee to keep ‘narrow range’ ahead of cenbank policy decision

By Jaspreet Kalra

MUMBAI (Reuters) – The Indian rupee is likely to open little changed on Friday ahead of the Reserve Bank of India’s monetary policy decision, even as the dollar index dipped, pressured by a rally in the Japanese yen.

Non-deliverable forwards indicate the rupee will open at around 83.34-83.35 to the U.S. dollar compared, barely changed compared to its close at 83.3525 in the previous session.

The dollar index fell 0.4% overnight and edged lower in Asia to 103.56. The rupee’s Asian peers were mostly rangebound except for the Korean won, which was rose 1.4%.

The Japanese yen extended its gains from Thursday and was up 0.4% amid expectations that the end to Japan’s ultra-low interest rates is nearing.

A softer dollar should aid the rupee slightly on Friday but the local unit is likely to hover in a “very narrow range,” heading into the RBI’s monetary policy decision, a foreign exchange trader at a private bank said.

The Indian central bank is widely expected to keep policy rates unchanged.

“We expect status quo on rates, whilst retaining the hawkish ‘withdrawal of accommodation’ stance,” DBS Bank stated in a Friday note.

“Despite a resumption in strong inflows … rupee has been kept on the weaker end of the spectrum, reflecting the authorities’ strong intervention presence.”

Overseas investors have bought $3.2 billion worth of Indian equities in December so far, pushing the month’s tally to the highest since July.

The 10-year U.S. Treasury yield ticked up in Asia after falling to 4.12% in New York overnight, its lowest level in 3 months, ahead of closely watched labour market data due in the U.S. later on Friday.

While the U.S. unemployment rate likely remained unchanged at 3.9% in November, non-farm payrolls are expected to have risen to 180,000 up from up 150,000 in October, according to Reuters’ polls.


** One-month non-deliverable rupee forward at 83.40; onshore one-month forward premium at 7 paise

** Dollar index down at 103.57

** Brent crude futures up 1.4% at $75.1 per barrel

** Ten-year U.S. note yield at 4.17%

** As per NSDL data, foreign investors bought a net $24mln worth of Indian shares on Dec. 6

** NSDL data shows foreign investors sold a net $143.4mln worth of Indian bonds on Dec. 6

(Reporting by Jaspreet Kalra; Editing by Nivedita Bhattacharjee)