On Friday, the Indian rupee will be profiting due to a decline in US treasury yields, which signals yawning in the US labor market. While it will also be subject to dollar outflows from doubts surrounding the election outcome, during the first quarter, it will revive and absorb its coronavirus-related pent-up demand. Non-deliverable forwards indicate that the rupee is expected to open at 83.48-83.50 against the US dollar, slightly lower than the previous session’s rate of 83.5025.
Foreign investors look at the uncertain political situation and the upcoming Indian election, due on June 4. Because of these worries, they started withdrawing funds from stocks is the main reason behind the three-week low for the Nifty 50 index. With the foreign investors’ going out of $2 billion from Indian equities, it is said that withdrawing $800 million on Thursday alone is worse than others, as reported on the preliminary exchange data. This worry stems from the fact that there is no guarantee that the BJP-led party of Prime Minister Narendra Modi will garner the margin of victory the opinion polls predicted.
There has been a decline in the yield of the global US Treasury on Thursday after data showed a larger than-anticipated rise in initial jobless claims. This was coupled with weak employment data, which showed the smallest increase in non–farming jobs in the past six months. These data show that maybe there is a labor market baking a bit. Also, market participants are looking forward to a highly expected US inflation reading, which will be released on Wednesday this week only. ” San Francisco Fed President Mary Daly shared on Thursday that as much uncertainty lies in the outlook of inflation in the near future, she thoughtfully noted, “the trend for price pressure seems gradually moderating.”
Overall, the Indian rupee faces a complex interplay of domestic and international factors on Friday, with its performance hinging on developments in the US labor market, the outcome of the Indian elections, and global inflation trends. Investors will closely monitor these indicators to gauge the rupee’s trajectory in the near term.
Check here for the latest updates in Hindi!