Rupee expected to continue uptrend despite rising US treasury yields

Rupee in focus: Despite a slight weakening among most Asian currencies and higher US Treasury yields, the rupee is anticipated to resume its near-term uptrend.

Non-deliverable forwards suggest that the rupee will open around 82.82-82.84 against the US dollar, compared to the previous session's 82.8625.

Wednesday saw a decline to 82.90 due to a one-off outflow, but with that pressure alleviated and the near-term bias favoring the rupee's upside, analysts expect a move back to levels below 82.80 for USD/INR.

According to a currency trader at a bank, the dollar/rupee pair is viewed as a "sell on rallies" as long as it remains below the 83 handle, with anticipated downward movements expected to be gradual.

Asian currencies experienced marginal declines, influenced by an increase in US Treasury yields amid concerns over stubborn US inflation. 

The 2-year US Treasury yield reached 4.64 per cent in Asia, the highest level in almost two weeks.

The probability of a Federal Reserve rate cut at the June meeting decreased slightly, with next week's meeting deemed unlikely for a cut and the likelihood of one at the May meeting being very low.

Following the release of higher-than-expected US February inflation data, attention now turns to US retail sales figures later in the day to assess consumer spending trends. 

Additionally, the release of US producer price index and jobless claims data is scheduled for Thursday, leading up to the Fed meeting on March 19-20.

Market strategists are closely monitoring the upcoming Fed meeting to see if policymakers adjust their projection of three rate cuts in 2024 due to persistent inflationary pressures.

(With Reuters Inputs)