INDIA RUPEE-Fall in Asia FX weighs on rupee, but near-term view positive

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MUMBAI, Jan 19 (Reuters) – The Indian rupee fell against the dollar on Thursday on losses in its Asian peers, but some analysts remained bullish on its near-term outlook.

The rupee was trading at 81.3250 per US dollar at 10:14 am IST, after opening at 81.38. The local currency had closed at 81.24 in the previous session.

Despite the higher opening for USD/INR, the outlook for the dollar is weak, said Amit Pabri, managing director of CR Forex. He cited the poor US data leading to lower Treasury yields and potential dollar returns.

The subsequent public offering of Adani Enterprises and the merger of Housing Development Finance Corp (HDFC) and HDFC Bank could lead to dollar inflows, Pabri said.

The combined entity of HDFC and HDFC Bank could result in new foreign fund flows of $2.5-$3.0 billion, according to a report by The Economic Times. For USD/INR, the 81.20 – 81.90 range is in play with a downside bias, said Anindya Banerjee, head – fx and interest rates research at Kotak Securities. “We look to sell (USD/INR) on the spot and our stop on positional shorts will be above 81.90 levels.”

Asian currencies struggled on Thursday amid mild risk aversion in the region fueled by concerns about growth prospects. The sharp decline in retail sales in the United States last month supported expectations of an economic slowdown.

Reflecting growth concerns, near- and far-maturity Treasury yields fell. Meanwhile, expectations of the US Federal Reserve’s terminal rate have fallen. This despite the hawkish comments from Fed officials.

Fed policymakers on Wednesday signaled they will push through more interest rate hikes, with several supporting a higher policy rate of at least 5% even as inflation shows signs that it has peaked and economic activity is declining. (Reporting by Nimesh Vora; Editing by Dhanya Ann Thoppil)

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