Ella 
The Indian rupee is anticipated to descend below the 83.50 mark against the US dollar on Tuesday, potentially reaching a historic low, driven by a robust rally of the dollar amidst heightened risk aversion. This speculation emerges alongside indications from data suggesting that the US Federal Reserve may postpone interest rate cuts.
Forecasts from non-deliverable forwards suggest that the rupee may open between 83.52 to 83.54 against the US dollar, a slight dip from the previous session’s 83.45. Despite managing to evade reaching the record low of 83.4550 on Monday, the local currency’s resilience was possibly bolstered by intervention from the Reserve Bank of India.
Expressing sentiments on the matter, an FX trader at a bank emphasized the psychological significance of the 83.50 threshold, anticipating the RBI to intervene at the market open to alleviate concerns amidst a jittery atmosphere.
In the broader Asian markets, currencies and equities sustained losses, with the dollar index witnessing an uptick alongside an increase in oil prices. The prevailing apprehensions regarding potential retaliatory actions from Israel following Iran’s recent attack, coupled with speculations of the Fed delaying rate cuts, contributed to a surge in demand for the safe-haven dollar.
Prime Minister Benjamin Netanyahu’s convening of Israel’s war cabinet for the second time within a day underscored the gravity of the situation. Concurrently, the S&P 500 Index registered its lowest performance in nearly two months.
Further exacerbating risk aversion were reports of a more substantial-than-expected surge in US retail sales, indicating a resilient economy and potentially prolonging the Fed’s stance on interest rates. This sentiment was mirrored in the ascent of the 10-year US Treasury yield to 4.66%, reaching its highest level since mid-November.
DBS Bank highlighted the potential dampening effect of risk aversion on emerging Asian currencies, citing the Indonesian rupiah’s decline by over 2% and a 1% drop in the Korean won.
Key Indicators:
One-month non-deliverable rupee forward at 83.60; onshore one-month forward premium at 7 paisa
Dollar index up at 106.38
Brent crude futures up 0.6% at $90.7 per barrel
Ten-year US note yield at 4.62%
NSDL data reveals foreign investors sold a net $952.1 million worth of Indian shares on April 12th.
