Rupee set for calm open amid yuan watch, two-sided flows
MUMBAI, June 11 (Reuters) - The Indian rupee is expected to open little changed on Wednesday and hold a narrow range, as traders monitor the Chinese yuan for cues amid China-U.S. trade developments and keep an eye on flows.
The 1-month non-deliverable forward indicated an open in the 85.58-85.62 range, versus the close of 85.6025 in the previous session.
The rupee's intraday range over the last two sessions has been limited to just about 20 paisa, underscoring how volatility has subsided. Interbank dealers have broadly pegged the near-term range on the dollar/rupee at 85.40–85.50 to 86.00–86.10.
"Within this range, which now seems increasingly entrenched, there is good two-way interest," a currency trader at a private bank said.
"At the top end, exporters and speculators tend to step in, while at the bottom, corporates are active dollar buyers."
The rupee's 10-day daily realized volatility has fallen to around 3%, its lowest level in more than two months. It's not just the rupee—volatility across most Asian currencies has declined and now sits well below recent peaks.
Receding concerns over a damaging trade war between the U.S. and its major trading partners have helped temper volatility and boosted appetite for risk assets.
The U.S. and China have agreed on a framework for a trade deal, raising investor hopes that it could pave the way toward resolving trade tensions.
The offshore Chinese yuan was marginally higher against the dollar on the day.
"The latest talks appear to be a constructive step forward, reducing the risk of a full-blown trade war," MUFG Bank said in a note. "Market will turn their focus to the upcoming U.S. CPI data due later today."
Economists polled by Reuters expect May core CPI to rise 0.3% month-on-month and the headline measure by 0.2%.
KEY INDICATORS:
** One-month non-deliverable rupee forward at 85.67; onshore one-month forward premium at 9.25 paise
** Dollar index up at 99.12 ** Brent crude futures down 0.3% at $66.7 per barrel ** Ten-year U.S. note yield at 4.47%
** As per NSDL data, foreign investors bought a net $282.1 million worth of Indian shares on June 9
** NSDL data shows foreign investors sold a net $26.5 million worth of Indian bonds on June 9
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