Rupee likely to be buoyed by Fed cut bets, softer US trade signals
MUMBAI, June 12 (Reuters) - The Indian rupee is expected to open marginally higher on Thursday, supported by a weaker dollar following further signs that U.S. President Donald Trump is taking a conciliatory approach on tariffs and on rising expectations of Federal Reserve rate cuts later this year.
The 1-month non-deliverable forward indicated an open in the 85.42-85.44 range, versus 85.51 in the previous session.
The dollar index fell 0.5% on Wednesday and extended losses in the Asia session on Thursday. The decline lifted regional currencies, with most Asian units rising between 0.1% and 0.4%.
The dip in USD/INR at the open may "at best" extend to the 85.30–85.35 zone, a currency trader at a state-run bank said. A move below that zone would mark a significant victory for rupee bulls, he added.
The trader's remarks come against the backdrop of relatively range-bound trading in the Indian currency over recent sessions.
Expectations of cooing trade tensions and potential Fed rate cuts kept the dollar under pressure. Trump said on Wednesday he would be willing to extend a July 8 deadline for completing trade talks with countries before higher U.S. tariffs are imposed.
Further, Trump said that a deal to get the fragile truce in the U.S.-China trade war back on track is done.
Meanwhile, data on Wednesday showed U.S. consumer prices rose less than expected in May, leading traders to ramp up bets of a rate cut at the Fed's September policy meeting.
The inflation report "eased some fears around persistent inflation acceleration" and accordingly, additional Fed easing was priced in with about 5-6 basis points of incremental easing added to end-2025 and 2026, Morgan Stanley said in its daily commentary.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 85.54; onshore one-month forward premium at 9 paisa
** Dollar index down at 98.40
** Brent crude futures down 0.6% at $69.4 per barrel
** Ten-year U.S. note yield at 4.4%
** As per NSDL data, foreign investors bought a net $359.6 million worth of Indian shares on June 10
** NSDL data shows foreign investors bought a net $159.4 million worth of Indian bonds on June 10
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