Rupee Eyes Mild Relief as Asian Peers Rise on “Modestly” Dovish Fed

The Indian rupee is expected to edge up at Thursday’s open, following gains in most Asian currencies. Parts of the market interpreted the Federal Reserve’s policy decision, along with Chair Warsh’s subsequent remarks, as modestly dovish.

In the NDF market, the Indian rupee is trading at 95.15-95.20 range, after closing 95.22 on Wednesday.

Two policymakers dissented in favour of a rate hike. Markets had braced for more hawkish dissents, so the lower-than-expected count struck some analysts as a dovish surprise.

The Fed's widely expected hold did little to change expectations for December, with markets still pricing in better than an 80% chance of a rate hike.

The 2-year US Treasury yield fell, while yields on longer maturities climbed. The dollar index also declined.

The dollar's weakness against Asian currencies should give the rupee some relief at a time when surging oil prices continue to weigh on it. Brent crude is trading near $115 a barrel.

The rupee has repeatedly leaned on Reserve Bank of India intervention to contain deeper losses in recent sessions. That pattern showed up again on Wednesday, when the central bank sold dollars ahead of the market open.

Indian shares are expected to open little changed on Thursday after the US Federal Reserve left interest rates unchanged, as widely anticipated, while elevated oil prices kept investors cautious.

GIFT Nifty futures stood at 22,708, pointing to a muted start for the benchmark Nifty 50, which closed at 22,698.85 on Wednesday.

Foreign portfolio investors bought Indian shares worth $91.58 million on Wednesday, marking a second straight session of net buying, provisional data showed. They have sold $3.74 billion worth of shares so far in October.