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Rupee to hold near key level waiting for important US data

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By Nimesh Vora

MUMBAI, June 18 (Reuters) -The Indian rupee is expected to open largely unchanged and hover around the 83.50 mark ahead ofU.S. retail sales data, which is expected to impact expectations around the Federal Reserve's policy rate decisionlater this year.

Non-deliverable forwards indicate therupee INR=IN will open at 83.53-83.56 to the U.S. dollar, compared with 83.5550 on Friday. Indian financial markets were closedon Monday.

The Asian currency traded in a narrow 10-paisa range last week.Persistent dollar buying by companies for debt obligations and hedging near-term payments was countered by the Reserve Bank of India'sintervention in non-deliverable forwards,spot and currency futures.

The rupee avoided slipping below the 83.5750 all-time low, primarily on back of the RBI'sintervention.

"That script will largely play out again with 83.50 acting as a centre point. You have to presume that RBI won't allow 83.5750 to be taken out, while dips (on dollar rupee) will remain shallow and contained," a currency trader at a bank said.

"The RBI defence is spurring small intraday (dollar) shorts. Other than that, speculative activity is minimal."

Meanwhile,May retail sales in the U.S.rose 0.2% month-on-month, data due later in the day is expected to show. The data will help investors gauge how high interest rates are impacting U.S. consumers. April's data indicated a slight softness, signalling that the high borrowing cost may finally having an impact on US retail spends.

Markets will look for confirmation that the macro backdrop is weakening after the April numbers, ING Bank said in a note.

A weaker May print, which would come on the back of the lower-than-expected May U.S. inflation rate, will make traders more confident that Fed will cut rates this year, most likely in September.

KEY INDICATORS: ** One-month non-deliverable rupee INRNDFOR= forward at 83.60; onshore one-month forward premium at 7.5 paise ** Dollar index =USD up at 105.38 ** Brent crude futures LCOc1 down 0.1% at $84.1 per barrel ** Ten-year U.S. note yield at 4.27%

** As per NSDL data, foreign investors bought a net $331.6mln worth of Indian shares on Jun. 13

** NSDL data shows foreign investors bought a net $114.8mln worth of Indian bonds on Jun. 13

Reporting by Nimesh Vora; Editing by Nivedita Bhattacharjee


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