Rupee may drop on weak risk, eyes fallout of RBI's swap maturity

FILE PHOTO: A customer hands Indian currency notes to an attendant at a fuel station in Mumbai

By Nimesh Vora

MUMBAI (Reuters) - The Indian rupee is likely to fall on Monday, tracking weakness in Asian shares and currencies, while investors eyed the impact of the Reserve Bank of India's $5 billion swap maturity.

Non-deliverable forwards (NDFs) indicate the rupee will open at around 83.16-83.18 to the U.S. dollar, compared with 83.1225 in the previous session.

The rupee on Friday managed a small relief rally on aggressive intervention by the RBI in NDFs and spot.

Its looks like the intervention "will not prove too sticky" and the rupee "will be back under pressure", a forex trader at a bank said.

"The big talking point today will be how RBI manages the swap maturity."

The RBI's swap maturity has promoted concerns about a dollar crunch and the central bank, like last week, may once again be a provider of dollars, according to traders.

Asian shared dropped following Friday's decline in U.S. equities on worries over climbing Treasury yields and the Middle East conflict. The S&P 500 Index's fall on Friday took its weekly losses to 2.4%, and the gauge is now down about 8% from August highs.

Asian currencies followed equities lower, while the dollar index inched up.

Robust U.S. economic data, signals by Federal Reserve officials that rates are likely to remain high and supply-demand dynamics have prompted a jump in Treasury yields. The 10-year yield is hovering just below the 5% handle.

The Fed at its Oct. 31-Nov. 1 meeting is widely expected to keep rates on hold, while keeping a relatively hawkish tone. Fed officials are now in the blackout period.

With the Fed in the blackout period, attention this week focused on U.S. preliminary third quarter GDP data, ANZ said in a note.

The GDP data is due on Thursday.

KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.24; onshore one-month forward premium at 7.75 paisa ** Dollar index up at 106.24 ** Brent crude futures down 0.8% at $91.4 per barrel ** Ten-year U.S. note yield at 4.98% ** As per NSDL data, foreign investors sold a net $114.3mln worth of Indian shares on Oct. 19

** NSDL data shows foreign investors sold a net $1.9mln worth of Indian bonds on Oct. 19

(Reporting by Nimesh Vora; Editing by Sonia Cheema)