MUMBAI: The Indian rupee may rise more on Wednesday, aided by the US dollar’s broad decline in the lead-up to the crucial US inflation data. Non-deliverable forwards indicate rupee will open at around 82.32-82.34 to the US dollar compared with 82.3650 on Tuesday.
Market participants should expect rupee to do better at the opening than what offshore is indicating, a foreign exchange trader said.
The “across the board” weakness on the dollar means that the “bias is definitely on the upside” for the rupee, the trader added.
The local currency is on a two-day winning run that has helped it remain within the 81.80-82.80 band that is seen as a near-term range by market participants.
The dollar index extended losses in Asia, slipping to 101.40, the lowest in two months.
Asian currencies were up 0.2% to 0.5%.
Data due later in the day is expected to show that both headline and core US consumer price index rose 0.3% month-on-month in June, per a Reuters poll of economists. On a year-on-year basis, headline CPI is expected to climb 3.1% and core by 5%.
“It’s the month-over-month clip that is the more interesting period to consider considering base effects will be influential in driving down the year-over-year metric,” said Chris Weston, head of research at Melbourne-based Pepperstone.
Indian rupee likely to inch up as dollar hits two-month low
Heading into the data, investors have fully priced a 25 basis points rate hike at this month’s meeting. Policymakers at the US Federal Reserve have indicated that one more rate hike after July.
The central bank is not done raising its short-term rate target, New York Fed President John Williams said in an interview with the Financial Times published on Tuesday.
However, investors are doubtful that the Fed will deliver another rate hike beyond that in July.
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