Mini Relief For Rupee Not Likely To Stick; US Jobs Data Awaited

The pressure on the Indian rupee is likely to persist on Friday, heading into the U.S. jobs report that will likely decide whether the dollar remains on a bullish path.

The 1-month non-deliverable forward indicated that the rupee will open at 85.88-85.90 to the U.S. dollar compared with 85.8475 in the previous session.

The local currency slipped to an all-time low of 85.9325 on Thursday but recovered due to likely intervention by the Reserve Bank of India and dollar offers by foreign banks.

(I) "Would put down yesterday's correction (in the ongoing uptrend in the dollar/rupee pair) to the market showing a bit of respect to the 86 level," a currency trader at a bank said.

However, the rupee "just will not be able to manage a good enough" recovery due to the strong dollar and elevated U.S. Treasury yields.

The dollar index, at 109.20, is not far away from the multi-month highs hit last week. The 10-year yield is holding an over eight-month high, fuelled by expectations that President-elect Donald Trump 's policies will stoke inflation and boost growth.

The U.S. nonfarm payrolls data, due after Indian markets close, will likely dictate what happens to the dollar and yields in the lead-up to Trump's inauguration. Nonfarm payrolls are expected to have risen by 160,000, according to a Reuters poll.

If the unemployment rate remains unchanged at 4.2% and payrolls increase by more than 200,000, Treasury yields will likely rise and the dollar will "find good buyers", said Chris Weston, head of research at Pepperstone, a Melbourne-based broker.

The jobs data comes in the backdrop of the Federal Reserve having indicated that it will proceed carefully on rate cuts this year.

KEY INDICATORS:

One-month non-deliverable rupee forward at 86.16; onshore one-month forward premium at 27 paisa

Dollar index at 109.20

Brent crude futures up 0.2% at $77.1 per barrel, rose 1% on Thursday
Ten-year U.S. note yield at 4.68%

As per NSDL data, foreign investors sold a net $434.4 mln worth of Indian shares on Jan. 8

NSDL data shows foreign investors sold a net $274.7 mln worth of Indian bonds on Jan. 8