By Nimesh Vora MUMBAI, Oct 7 (Reuters) – The Indian rupee is set to open slightly higher on Tuesday, supported by the central bank’s defence of the 88.80 handle, with expected IPO inflows providing an additional boost. The 1-month non-deliverable forward indicated the rupee will open in the 88.72-88.74 range versus the U.S. dollar, compared with Monday's finish at 88.78. Intraday volatility in the rupee has dipped in recent sessions, with the Reserve Bank of India defending 88.80, according to bankers. The local unit on Monday traded in a narrow 7-paisa range, with the RBI seen supplying dollars through state-run banks for most of the session, they added. Bankers said the RBI has been intervening heavily in both the onshore spot and offshore non-deliverable forward markets over the past three weeks. They estimated the total intervention at a minimum of $10 billion. One banker said the actual figure could be more than $20 billion, underscoring the scale of the central bank's efforts to support the rupee. A currency trader at a mid-sized private sector bank said it appears the RBI does not want the rupee to slip past 89 for now. With the central bank aggressively defending the current level, this will cap incremental dollar long positions and nudge importers to rethink slightly the extent to which they hedge, the trader said. The RBI's defence of the 88.80 level is likely to be bolstered by expected IPO-related inflows, which are anticipated to attract interest from foreign investors. Together, they will provide near-term relief for the struggling rupee. Non-bank lender Tata Capital's $1.75 billion share sale kicked off on October 6, while LG Electronics India will open its $1.3 billion IPO later in the day. Meanwhile, Asian currencies were mixed on Tuesday, while the dollar index climbed past 98. The Japanese yen was little changed after Monday's plunge, holding below 150 to the dollar. KEY INDICATORS: ** One-month non-deliverable rupee forward at 88.88; onshore one-month forward premium at 15 paise ** Dollar index up at 98.16 ** Brent crude futures up 0.4% at $65.7 per barrel ** Ten-year U.S. note yield at 4.16% ** As per NSDL data, foreign investors sold a net $178.5 million worth of Indian shares on October 3 ** NSDL data shows foreign investors bought a net $139.9 million worth of Indian bonds on October 3 (Reporting by Nimesh Vora; Editing by Sonia Cheema)
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