India Rupee: Fiscal year change-led carry boosts Indian rupee; importers cap upside

First Citizens Bancshares (Tennessee)

28/03/2023 06:56

By Nimesh  Vora
       MUMBAI, March 28 (Reuters) - The Indian rupee was
trading higher versus the U.S. currency on Tuesday, boosted by
the carry return of running short dollar positions on account of
the upcoming change in the fiscal year.
    The rupee  INR=IN  was at 82.1825 to the dollar by 11.14
a.m. IST compared with 82.37 in the previous session.
    The carry return for running short dollar positions
overnight was at 5.5/6.5 paisa, according to traders. The high
carry cost is on account of today's spot date falling on the
last day of the fiscal year on March 31. Carry reflects the
interest rate differentials between two currencies. 
    The carry has come down over the course of last few
sessions, but when the rupee's overall price action is
considered, a 6 paisa carry "looks decent," a spot trader at a
private sector bank said.
    "Obviously when we open tomorrow, the initial quotes on
rupee could very well reflect this carry."
    The bank's corporate book is "lined up" with orders from
importers just ahead of the 82 support on pair, the trader said.
    Meanwhile, the dollar index  =USD  inched lower to near
102.60, in the backdrop of a slightly better risk mood. Asian
shares were mostly higher and U.S. equity futures inched up.
Indian shares reversed early gains and was trading down. 
    Worries over the U.S. banking sector lessened to an extent
following First Citizens BancShares' agreement to buy all of
Silicon Valley Bank's deposits and loans.
        The dollar had previously benefited from a risk-off
fuelled by the U.S. banking contagion fears.
    The focus now shifts to the U.S. data, with Conference
Board’s consumer confidence data due later in the day.
    "Consensus expects the consumer index will fall a third
month to 101 in March from 102.9 in the previous month," DBS
Research said in a note. A plunge in the index will be seen as a
sign of a probable deeper recession, it said. 

 (Reporting by Nimesh Vora; Editing by Dhanya Ann Thoppil)
 ((nimesh.vora@tr.com))