Despite Asian currencies falling, the Indian rupee may open higher versus the U.S. dollar on Wednesday.
NDFs predict the rupee will open at 82.06-82.08, up from 82.1175 in the previous session.
A private bank forex trader stated the USD/INR NDF has not reacted to another round of Chinese yuan losses and the rise in USD/Asia.
“While it looks like (USD/INR) will be lower at open, I will be surprised if we move back below 82 today.”
On Tuesday, dollar outflows lowered the rupee.
“It could be that rupee is just making up for yesterday’s session,” another trader added.
Since November 2022, the offshore Chinese yuan has fallen below 7.20 to the dollar. Korean won fell 1% and the Thai baht 0.3%.
China’s slow post-pandemic recovery and different interest rate forecasts from the U.S. have hurt yuan demand. The offshore Chinese yuan fell 1% this month after 3% in May.
The yuan has fallen against the rupee for six months.
Before Jerome Powell’s congressional hearing, Asia’s dollar index rose. Powell will talk after the central bank held rates last week but signaled two more hikes this year.
“We expect Fed Chair Powell to deliver a hawkish semi-annual testimony to Congress reflecting the FOMC’s (Federal Open Market Committee) median projection for higher interest rates in coming months and more resilient inflation in the near term,” ANZ wrote.
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