INDIA RUPEE — Indian rupee to rise after US yields reverse inflation — led spike, Fed hike bets remain low
By Nimesh Vora MUMBAI, Oct 15 (Reuters) — The Indian rupee is likely to rise at the open on Thursday, boosted by the pullback in US Treasury yields after an initial rise on sticky inflation data, with traders still pricing in limited chances of a Federal Reserve rate hike in October. The rupee is expected to open in the 95.02 to 95.06 range, per traders, having settled at 95.15 to the dollar on Wednesday. The focus is squarely on the Reserve Bank of India and how far it is willing to go to shore up the rupee. The central bank has curbed dollar demand through a series of measures, following that up with direct dollar sales. The message from the RBI is "unmistakable," a currency trader at a bank said, about arresting the currency's slide. "The question now is how far the RBI is willing to go, and how much further the market will allow it," he said. "Signs of resistance were already evident yesterday," he said, pointing to the rupee rally hitting a hurdle past the 95 level. Us Yields, Fed Hike Odds Whipsaw US Treasury yields surged initially after US inflation rose more than expected in September, and traders sharply increased bets on a Fed rate hike this month. The move, however, rev
By Nimesh Vora MUMBAI, Oct 15 (Reuters) — The Indian rupee is likely to rise at the open on Thursday, boosted by the pullback in US Treasury yields after an initial rise on sticky inflation data, with traders still pricing in limited chances of a Federal Reserve rate hike in October. 15 to the dollar on Wednesday. The focus is squarely on the Reserve Bank of India and how far it is willing to go to shore up the rupee. The central bank has curbed dollar demand through a series of measures, following that up with direct dollar sales.
The message from the RBI is "unmistakable," a currency trader at a bank said, about arresting the currency's slide. "The question now is how far the RBI is willing to go, and how much further the market will allow it," he said. "Signs of resistance were already evident yesterday," he said, pointing to the rupee rally hitting a hurdle past the 95 level. Us Yields, Fed Hike Odds Whipsaw US Treasury yields surged initially after US inflation rose more than expected in September, and traders sharply increased bets on a Fed rate hike this month.
The move, however, reversed, with analysts attributing the pullback to risk aversion. Morgan Stanley further pointed to demand from real-money and fast-money investors as the reason behind the pullback in yields. Fed rate-hike expectations followed a similar trajectory, jumping to nearly 60% before retreating to less than one-in-four, close to where they stood before the inflation data. "That reversal deserves attention.
When inflation surprises to the upside, yet Treasury yields finish lower, it suggests investors are increasingly concerned about what sticky inflation, cost-of-living pressures and higher-for-longer rates could do to an already pronounced K-shaped economy," said Chris Weston, head of research at Melbourne-based Pepperstone. com)