The Indian rupee is poised to open slightly higher on Wednesday, supported by a rebound in Asian currencies and a drop in oil prices. Additionally, traders will be closely monitoring the Reserve Bank of India’s (RBI) policy decision and the release of minutes from the U.S. Federal Reserve’s previous meeting.
The 1-month non-deliverable forward indicates the rupee
USDINR is expected to open around 83.93-83.94 against the U.S. dollar, improving from the prior close of 83.9625.
The U.S. dollar index DXY remains steady near 102.50, while Asian currencies recover from recent losses. Brent crude prices plummeted by 4.6% on Tuesday, following reports of a potential ceasefire between Hezbollah and Israel.
In other news, Indian sovereign bonds will be added to the FTSE Russell Emerging Markets Government Bond Index (EMGBI), further boosting market sentiment. This follows similar moves by JP Morgan and Bloomberg Index Services.
According to a forex trader at a bank, the rupee has some positive momentum today and may trade with a “slightly positive bias,” although significant recovery is unlikely. “The rupee might reach 83.90 at best, with the RBI policy decision having minimal impact,” they added.
The RBI is anticipated to maintain the current policy rate, but some economists speculate a shift towards a neutral stance, which could pave the way for a rate cut in December.
Federal Reserve Minutes on Investor Radar
Traders are also keenly awaiting the minutes from the Federal Reserve’s September meeting, where discussions focused on a weakening labor market. The minutes are expected to shed light on whether policymakers leaned towards a 25 or 50 basis point rate cut, providing insights into the Fed’s approach to balancing inflation risks and employment concerns.
