MUMBAI: The Indian rupee is expected to open lower against the US currency on Wednesday as safe-haven demand fuelled a broad dollar recovery versus Asian currencies.
The rupee is tipped to open at around 81.20 per US dollar, down from 81.0950 in the previous session.
The fall in the dollar offshore following more good news on US inflation did not last and the rupee should probably open a bit lower, a trader at a Mumbai-based bank said.
The USD/INR 1-month non-deliverable forward had dropped to near 80.90 following the US wholesale inflation data, but managed to recover to near the 81.40 levels.
The dollar index has at one point on Tuesday dropped to 105.30, the lowest since mid-August.
Indian rupee slips after positive opening on corporate dollar demand
US producer prices increased less than expected in October, offering more evidence that inflation was beginning to ease.
Treasury yields extended their recent slide and US equities rose overnight.
The produce price data comes on the back of last week’s softer-than-expected US consumer inflation print that led traders to price in smaller rate hikes from the US Federal Reserve starting next month.
The inflation data-prompted fall on the dollar index did not last.
News of a Russian missile attacks killing two people in a Polish village near the Ukraine border prompted fears of an escalation in the Ukraine war, boosting demand for the safe haven dollar.
A few analysts reckoned that the dollar’s recent fall may have been too quick and played a part in its recovery.
Asian currencies were down 0.2% to 0.3%, while equities were mixed.
US equity futures were a tad lower.
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