Rupee awaits US treasury yields, RBI’s comments on liquidity

Rupee in focus: The Rupee is anticipated to start the day quietly on Thursday, awaiting remarks from the central bank regarding liquidity while keeping a close watch on US Treasury yields.

Non-deliverable forwards suggest that the Rupee will open nearly unchanged against the US dollar, maintaining the previous session's level of 82.9675.

The Reserve Bank of India's rate-setting panel, set to announce its policy decision at 10:00 am, is widely expected to keep the key interest rate unchanged. 

Most economists anticipate that the central bank will maintain its "withdrawal of accommodation" policy stance without alterations.

According to a FX trader at a bank, the impact of the policy decision on the Rupee is likely to be minimal. 

However, the commentary on liquidity could spark some interest among investors.

Looking ahead over the next 2 to 3 months, the trajectory of US Treasury yields and investors' positioning before elections will be crucial factors influencing the Rupee's movement, the trader added.

In Wednesday's trading, the Rupee experienced its most positive performance in nearly a month, primarily attributed to inflows.

Despite the current lack of momentum, another FX trader at a different bank expressed a preference for short positions on USD/INR at present.

Across Asia, the Rupee's counterparts remained mostly rangebound amid slight fluctuations in US Treasury yields and generally positive risk sentiment. 

Attention remained focused on the timing of the Federal Reserve's first rate cut.

Federal Reserve officials reiterated their stance of being in no rush to implement interest rate cuts.

According to Morgan Stanley, there was a consistent message from Fed policymakers, indicating a likelihood of rate cuts "later" or "at some point" this year. 

In response to policymakers' comments and robust US data, investors have tempered their expectations for a Fed rate cut in March.

(With Reuters Inputs)