INDIA RUPEE-Rupee likely to struggle due to dollar's rally, weaker yuan

Credit: REUTERS/FRANCIS MASCARENHAS

By Jaspreet Kalra

MUMBAI, March 22 (Reuters) - The Indian rupee is likely to open weaker on Friday after stronger-than-expected U.S. economic data boosted the U.S. dollar and the offshore Chinese yuan fell to its lowest level in four months.

Non-deliverable forwards indicate the rupee INR=IN will open around 83.20-83.25 to the U.S. dollar, compared with its close of 83.1475 in the previous session.

The dollar index jumped and last quoted higher at 104.1. It rose 0.7% on Thursday in its strongest intra-day gain in over a month after U.S. initial jobless claims fell and existing home sales surged more than expected to a one-year high, signalling sustained momentum in the economy.

It'll be key to watch if the rupee's opening drop spurs dollar sales from exporters, which may help limit some weakness, a foreign exchange trader at a private bank said.

Persistent dollar demand from local corporates and debt repayment outflows have hurt the rupee over recent sessions and a continuation of that trend may add to the depreciation pressure, the trader added.

Asian currencies weakened across the board, with the Korean won's 1.3% slump leading losses. The offshore Chinese yuan fell 0.3% to 7.24 against the dollar, its lowest since mid-November.

The rupee is likely to trade between 83.10 and 83.30 on the day, with dollar demand close to the end of India's financial year exerting downward pressure, said Anindya Banerjee, head of foreign exchange research at Kotak Securities.

While no key U.S. economic data is on tap, investors will keep an eye on remarks from Fed Chair Jerome Powell and other Fed speakers slated to speak later in the day.

KEY INDICATORS:

** One-month non-deliverable rupee INRNDFOR= forward at 83.33; onshore one-month forward premium at 6.75 paisa

** Dollar index =USD up at 104.11

** Brent crude futures LCOc1 down 0.6% at $85.20 per barrel

** Ten-year U.S. note yield at 4.26%

** As per NSDL data, foreign investors sold a net $269.9 million worth of Indian shares on March 20

** NSDL data shows foreign investors bought a net $259.8 million worth of Indian bonds on March 20

(Reporting by Jaspreet Kalra; Editing by Savio D'Souza)

((jaspreet.kalra@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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