MUMBAI: The Indian Rupee was nearly flat and forward premiums dipped on Wednesday, with traders awaiting consumer inflation data from India and the United States, while worries over US tariffs kept risk appetite tepid.
The rupee was at 87.2250 as of 11:00 a.m. IST, little changed from its close at 87.2125 in the previous session.
The dollar index ticked up in Asia trade on Wednesday after declining to a five-month low on Tuesday and was last quoted at 103.6, up 0.1% on the day, while Asian currencies fell 0.1% to 0.5%.
Mild dollar sales by foreign banks helped the rupee hold steady amid a decline in Asian currencies, a trader at a mid-sized private bank said.
Meanwhile, dollar-rupee forward premiums dipped on the back of higher US bond yields.
The one-year implied yield was down slightly at 2.16% while the one-year US Treasury yield was up about 5 basis points (bps) at 4.04%.
Inflation reports from the US and India are in focus and are expected to influence the rate cut trajectory of the countries’ central banks.
India’s consumer price index is anticipated to have eased to 3.98%, while month-on-month US core CPI likely dipped to 0.3% in February, according to Reuters polls Traders are currently pricing in about 76 bps worth of reductions by the Federal Reserve this year.
“Dovish policy minutes, a downshift in annual growth this year and a sub-4% inflation print lay the ground for 50bp more cuts this year, with the next move likely in April,” DBS bank said in a note, referring to the outlook for the Reserve Bank of India’s policy rates.
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