Indian rupee opens at 89.44 per US dollar, nearly unchanged from the previous close of 89.4575.
Rupee Outlook
For Monday, the Indian rupee is expected to climb at the open on Monday, boosted by blowout economic growth data that beat the most optimistic forecasts, delivering a rare jolt of confidence to a currency that has been under persistent pressure.
The 1-month non-deliverable forward indicated the rupee was expected open in the 89.32-89.36 range versus the US dollar, having settled at 89.4575 on Friday. India posted its fastest growth in six quarters, with the September-quarter gross domestic product surging 8.2% and smashing the 7.3% forecast in a Reuters poll.
The upside surprise injected a dose of confidence into the rupee, which is currently hovering near all-time lows. The data has provided a fundamental anchor for the local currency, which has struggled to hold on to any form of relief rallies, bankers said.
A senior trader at a private sector bank added that the data “changes the conversation a bit, at least for the moment,” and noted that the robust growth could “draw in portfolio inflows if other conditions remain supportive”. Equity flows have remained tepid, with foreign investors slipping back into net sales in November, pulling out a little over $400 million after buying $1.6 billion in October.
The flows point to still-cautious sentiment among overseas investors. In the three months prior to October, overseas investors had withdrawn nearly $7.5 billion. The GDP number makes it less likely the Reserve Bank of India will cut rates this week, a factor that is also supportive of the rupee.
Barclays said in a note that the data “was too hot to ignore” and that it no longer expects the RBI to deliver a rate cut on Friday.
Key indictaors:
** One-month non-deliverable rupee forward at 89.50; onshore one-month forward premium at 13.5 paisa
** Dollar index up at 99.45
** Brent crude futures up 1.5% at $63.3 per barrel
** Ten-year U.S. note yield at 4.04%
** As per NSDL data, foreign investors sold a net $56.4 million worth of Indian shares on Nov. 27
** NSDL data shows foreign investors sold a net $7.1 million worth of Indian bonds on Nov. 27