The Indian rupee is predicted to rise on Tuesday due to the Chinese yuan’s recovery in the wake of a below-expectation daily USD/CNY fix. Rupees are anticipated to open around 81.94-81.96 to the US dollar, which is compared to 82.04 in the previous session. Although traders don’t expect to see a significant shift after opening dip, the use of non-deliverable forwards suggests that the rupee’s near-term range has decreased to 81.80-82.20. The offshore yuan increased to 0.3% to 7.2220 to the dollar following the People’s Bank of China setting the USD/CNY mid-point below expectations. Investors will now monitor forthcoming daily fixes to see whether there is a pattern of slowing the pace of the yuan’s depreciation. The latest PCE print is expected on Friday, with a host of data being released this week in the US that could influence investors’ expectations about interest rates.
The recent uplift in the yuan has impacted other Asian currencies, with the US dollar index declining and Asian stocks surging. While the Federal Reserve has declared two more interest rates hikes in its future, there is some doubt over whether futures indicate just one more rate increase. On Friday, the core PCE print data is due, which could influence future rate hike trends.
The data reflects that foreign investors purchased shares worth $24.3milion in India, while Indian bonds were bought at a net $371.8milion on 23 June as displayed by NSDL.
Overall, this rise in the yuan may well support the rupee and other Asian currencies, however, traders do not expect any significant changes following the opening dip. Investors will be looking to assess the impact of the recent rise of the yuan and the US data that is expected this week on future interest rate decisions.
