The USD/INR is tipped to open lower, extending Friday's losses when it fell to a four-month low, as the federal government implemented significant policy changes to set its finances in order and improve investor sentiment. The pair may open below 54.00 compared to 54.30 late Friday, a trader with a state-run bank says; it may trade in a 53.70-54.40 band till 0530 GMT when the central bank's rate decision provides the next major cue. Late Friday, the government moved to allow greater foreign participation in the country's retail and aviation sectors. This follows a politically controversial increase in diesel prices as the government seeks to limit subsidies and bridge a yawning fiscal gap. "The measures give a positive message to rating agencies who have been warning India of a rating cut to junk status in the absence of significant policy reforms," the trader says.
Foreign funds net bought a provisional INR28.34 billion ($521.9 million) worth of Indian shares Friday; 1-month NDFs are quoted at 53.91/53.94.
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