Rupee may decline slightly on weak risk, dollar uptick

MUMBAI, June 20 (Reuters) - The Indian rupee is expected to fall on Tuesday in wake of losses on Asian peers and poor risk appetite.

Non-deliverable forwards indicate rupee will open at around 81.98 to the U.S. dollar compared with 81.9350 in the previous session.

The rupee on Monday witnessed a quiet session, hovering in a 81.90-82.00 range.

\“It is to be expected that there will be support (for USD/INR) at below 82,\” an FX trader at a private sector bank said.

\“Today, it looks like a another holding session with a mild bias on the upside (for USD/INR pair). Having said that, we would sell on the uptick.\”

The offshore Chinese yuan dropped below 7.18 to the dollar, not too far from the year-to-date low. China on Tuesday, expectedly, lowered two more key lending by 10 basis points.

Other Asian currencies were down 0.1% to 0.3% while the dollar index inched up to 102.56.

Asian equities were mostly lower, pressured by Chinas tepid post-pandemic recovery. Meanwhile, futures pointed to a sightly lower opening for U.S. equities following the three-day weekend.

Focus this week is on Federal Reserve Chair Jerome Powells testimony to U.S lawmakers. This comes after the U.S. central bank opted for a pause last week following rate hikes over the previous ten meetings.

However, it was a hawkish pause, with the median view of Fed officials about the terminal rate rising by 50 basis points to 5.625%.

While the Fed paused last week, \“it has more work to do,\” ANZ said in a note.

“Although there are some encouraging signs that inflation is moderating, it isnt sufficient,\” ANZ said. The bank pointed that core U.S inflation rose by 0.4% month-on-month in May, well above a rate consistent with 2% annualised inflation.

KEY INDICATORS:

** One-month non-deliverable rupee forward at 82.06; onshore one-month forward premium at 7.5 paisa

** USD/INR NSE June futures settled at 81.9675 on Monday

** USD/INR June forward premium 1.75 paisa

** Dollar index up at 102.58

** Brent crude futures down 0.2% at $75.9 per barrel

** Ten-year U.S. note yield at 3.7880%

** SGX Nifty nearest-month futures down 0.3% at 18,809

** As per NSDL data, foreign investors bought a net $22.1 mln worth of Indian shares on June 16

** NSDL data shows foreign investors bought a net $133.8 mln worth of Indian bonds on June 16

Reporting by Nimesh Vora; Editing by Varun H K