Indian rupee looks to build on momentum on positive Asian cues

MUMBAI, July 25 (Reuters) - The Indian rupee will be looking to rise further versus the U.S. dollar on Tuesday, on back of rise in Asian currencies and positive risk mood.

Non-deliverable forwards indicate rupee will open little changed or slightly higher the dollar, having reached a three-week high of 81.8150 on Monday on equity inflows.

Offshore was indicating a quiet open, but USD/INR short positions will be counting on the favourable momentum to take pair below the next support of 81.75, a spot trader at a bank said.

\“If RBI (Reserve Bank of India) keeps away, we see a decent chance of a breakdown.\”

Asian currencies rose, with the offshore Chinese yuan leading the way while the dollar index inched lower to near 101.30. Investors await the result of the two-day U.S. Federal Reserve meeting, due on Wednesday.

Ahead of the Fed decision, data indicated that the U.S. economy was still growing as the third quarter began, but at a slower rate from the April-June period.

S&P Global said its flash U.S. Composite PMI index, which tracks manufacturing and service sectors, fell to a reading of 52 in July from 53.2 in June.

The reading showed a sixth straight month of growth, but restrained by softening conditions in the service sector.

The data reinforced expectations that the near-certain rate hike by the U.S. central bank this week would be the last of the current cycle.

Attention is firmly fixed on the Fed meeting, ANZ said in a note. The flash PMI data are consistent with the Fed pausing rate hikes after raising it by 25 basis points this week, it said.

KEY INDICATORS:

** One-month non-deliverable rupee forward at 81.86; onshore one-month forward premium at 8 paisa

** USD/INR NSE July futures settled on Monday at 81.8375

** USD/INR July forward premium at 1.25 paisa

** Dollar index down at 101.25

** Brent crude futures up 0.2% at $82.9 per barrel

** Ten-year U.S. note yield at 3.86% ** As per NSDL data, foreign investors sold a net $171.3 mln worth of Indian shares on Jul. 21

** NSDL data shows foreign investors bought a net $27.5 mln worth of Indian bonds on Jul. 21

Reporting by Nimesh Vora; Editing by Varun H K

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