MUMBAI — The Indian rupee could find some relief on Thursday as most of its Asian peers ticked higher and with the currency near levels at which the central bank had intervened aggressively.
The 1-month non-deliverable forward indicated that the rupee INR=IN will open flat-to-slightly higher from its close of 85.6450 per U.S. dollar in the previous session.
The offshore Chinese yuan inched up 0.2%, while the Korean won, the Thai baht and the Philippine peso strengthened by 0.4%.
“The way it has been (for the rupee, I am) not sure how much of Asia doing well means. However, any help right now will do,” a currency trader at a bank said.
“I am watching the level of 85.80”, he said, adding that a quick move past that level would be another sign of the extent of the strain on the currency.
Last Friday, when the rupee dropped to an all-time low of 85.80-85.81, the Reserve Bank of India intervened quite aggressively.
Focus on Trump
In the first quarter of 2025, a large part of the attention of Asian currency traders will be on what Donald Trump does once he is inaugurated as U.S. president on Jan. 20.
He has vowed to impose tariffs on trading partners, including China. The Asian giant’s reaction, if any on the potential tariffs, will have a spillover impact on other Asian currencies.
“The tariffs could force China into a response in the form of CNH devaluation and other such measures,” said Srinivas Puni, managing director at QuantArt Market Solutions.
The rupee will “feel the heat” if that happens, he said.
He expects 2025 will be a volatile year for the rupee, with a bias towards depreciation.
Key indicators:
** One-month non-deliverable rupee INRNDFOR= forward at 85.92; onshore one-month forward premium at 24.5 paisa
** Dollar index =USD down at 108.38
** Brent crude futures LCOc1 up 0.4% at $75 per barrel
** Ten-year U.S. note yield at 4.57%
** As per NSDL data, foreign investors sold a net $625 mln worth of Indian shares on Dec. 31
** NSDL data shows foreign investors sold a net $55.2 mln worth of Indian bonds on Dec. 31
—Reporting by Nimesh Vora; Editing by Savio D’Souza
