MUMBAI, July 25 (Reuters) – The Indian rupee will be looking to rise further versus the US dollar on Tuesday, on the back of the rise in Asian currencies and positive risk mood.
Non-deliverable forwards indicate the rupee will open little changed or slightly higher than the dollar, having reached a three-week high of 81.8150 on Monday on equity inflows.
Offshore was indicating a quiet open, but USD/INR short positions will be counting on the favorable momentum to take the pair below the next support of 81.75, a spot trader at a bank said.
“If RBI (Reserve Bank of India) keeps away, we see a decent chance of a breakdown.”
Asian currencies rose, with the offshore Chinese yuan leading the way while the dollar index inched lower to near 101.30. Investors await the result of the two-day US Federal Reserve meeting, due on Wednesday.
Ahead of the Fed decision, data indicated that the US economy was still growing as the third quarter began, but at a slower rate from the April-June period.
S&P Global said its flash US Composite PMI index, which tracks the manufacturing and service sectors, fell to a reading of 52 in July from 53.2 in June.
The reading showed a sixth straight month of growth, but restrained by softening conditions in the service sector.
The data reinforced expectations that the near-certain rate hike by the US central bank this week would be the last of the current cycle.
Attention is firmly fixed on the Fed meeting, ANZ said in a note. The flash PMI data are consistent with the Fed pausing rate hikes after raising it by 25 basis points this week, it said.
** One-month non-deliverable rupee forward at 81.86; onshore one-month forward premium at 8 paisa
** USD/INR NSE July futures settled on Monday at 81.8375
** USD/INR July forward premium at 1.25 paisa
** Dollar index down at 101.25
** Brent crude futures up 0.2% at $82.9 per barrel
** Ten-year US note yield at 3.86% ** As per NSDL data, foreign investors sold a net $171.3 mln worth of Indian shares on Jul. 21
** NSDL data shows foreign investors bought a net $27.5 mln worth of Indian bonds on Jul. 21
Reporting by Nimesh Vora; Editing by Varun HK
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