MUMBAI, Oct 31 (Reuters) - The Indian rupee is likely to open little changed on Tuesday on an uptick in Asian peers and a pickup in equity outflows, while investors await the Bank of Japan (BOJ) policy review.
Non-deliverable forwards indicate the rupee will open around Monday's closing of 83.25 to the U.S. dollar.
It is "of little surprise" that the rupee will barely move at open, a Mumbai-based forex trader at a bank said.
"The BOJ policy is quite important from the overall Asia FX and risk appetite perspective. Having said that, it is a stretch to think the rupee will react much."
The pickup in equity outflows "will mean any downside (on USD/INR) will be not much," he added.
Foreign investors have taken out $1.5 billion from Indian equities in the three trading sessions through Friday. Provisional data for Monday indicated more withdrawals.
The Japanese yen was slightly lower against the dollar before the BOJ's policy outcome, while other Asian currencies inched up.
The yen had rallied on Monday after a report said the central bank is considering tweaking its yield curve control policy to allow the 10-year Japanese government bond yield to rise above 1%.
The BOJ is set to consider a further adjustment to its yield curve control framework, potentially allowing the 10-year bond yield to rise above 1%, Nikkei newspaper reported.
The two anchor currencies in Asia – the yen and the Chinese yuan – are highly important for the broad dollar direction, HSBC Bank said in an email.
Should the BOJ be more hawkish than expected, "the yen's knee-jerk strength would still be short-lived" as the yield differential versus the U.S. is too wide, HSBC Bank said.
KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.31; onshore one-month forward premium at 5.5 paisa ** Dollar index at 106.26 ** Brent crude futures up 0.6% at $88 per barrel ** Ten-year U.S. note yield at 4.88% ** As per NSDL data, foreign investors sold a net $299.6 mln worth of Indian shares on Oct. 27
** NSDL data shows foreign investors bought a net $28.2 mln worth of Indian bonds on Oct. 27
(Reporting by Nimesh Vora; Editing by Mrigank Dhaniwala)
