The Indian rupee is anticipated to dip below the 83.50 mark against the U.S. dollar on Tuesday, facing pressure from the dollar’s widespread surge due to risk aversion sentiments. Non-deliverable forwards suggest that the rupee may open at 83.52-83.54 compared to the previous session’s 83.45.
Despite nearing the record low of 83.4550 on Monday, the rupee managed to evade it, possibly due to intervention by the Reserve Bank of India (RBI). Market analysts note that the psychological significance of the 83.50 level may prompt RBI intervention to stabilize the market.
In Asian markets, currencies and equities faced losses, while the dollar index rose, and oil prices increased. Concerns lingered over potential Israeli retaliation to Iran’s recent attack, coupled with indications of the U.S. Federal Reserve postponing interest rate cuts. The S&P 500 Index also dropped to its lowest point in nearly two months.
The unexpected surge in U.S. retail sales further dampened risk appetite, suggesting a robust economy and potentially delaying Fed interest rate adjustments. This risk aversion sentiment is expected to weigh on emerging Asian currencies, with the Indonesian rupiah and the Korean won already experiencing declines.
Key indicators include a one-month non-deliverable rupee forward at 83.60, onshore one-month forward premium at 7 paisa, the dollar index rising to 106.38, Brent crude futures up 0.6% at $90.7 per barrel, and the ten-year U.S. note yield at 4.62%. Foreign investors sold a net $952.1 million worth of Indian shares on April 12, as per NSDL data, and a net $211.8 million worth of Indian bonds on the same day.
