MUMBAI, April 19 (Reuters) - The Indian rupee is expected largely unchanged to the U.S. dollar on Wednesday following range-bound Asian peers and more hawkish comments from Federal Reserve officials.
Non-deliverable forwards indicate the rupee will open at around 82.02-82.08 to the U.S. dollar, compared with 82.04 in the previous session.
Asian currencies and the dollar index were mostly flat, while near-maturity U.S. yields inched up. Investors digested comments from Fed officials that reinforced expectations that the central bank will hike rates at its next meeting.
The U.S. central bank most likely has one more interest rate rise ahead of it in its effort to lower inflation, Atlanta Fed President Raphael Bostic said on Tuesday.
St. Louis Fed President James Bullard also said that the Fed should continue raising interest rates on the back of recent data showing inflation remaining persistent.
The two-year Treasury yield overnight rose to its highest level in a month.
"Elevated U.S. bond yields favour the dollar bulls and help limit the downside for the (USD/INR) pair," Kunal Sodhani, vice-president at Shinhan Bank, said.
"With Fed speakers being hawkish, markets expect the Fed to raise its policy rate again in May."
Futures are pricing in a 85% chance that the Fed will increase rates at its May 2-3 meeting.
Based only on the price action in the last two days, the downside on the pair "certainly looks capped", but long positions on the rupee are unlikely "to cave in" until 82.20-82.30 is taken out, a spot trader said.
The higher U.S. yields did not benefit the dollar in Tuesday's session. The dollar index overnight fell back below 102.
Risk is holding up well so far to the prospect of another Fed hike. U.S. equities were little changed.
Reporting by Nimesh Vora; Editing by Sonia Cheema
Source: Reuters