MUMBAI: The Indian rupee strengthened on Wednesday, buoyed by strength in its Asian peers and likely dollar inflows, while traders awaited US consumer inflation data due later in the day.
The rupee was at 83.21 against the US dollar as of 9:50 a.m. IST, up 0.1% compared with its close at 83.3150 on Monday. Indian currency and debt markets were shut on Tuesday for a local holiday.
The dollar index was little changed at 104.14 while most Asian currencies ticked up, with the Indonesian rupiah, up 0.3%, leading gains.
Strong selling interest on the dollar-rupee pair and relatively light demand from importers aided the rupee’s gains in early trading, a foreign exchange trader at a state-run bank said.
US bond yields slipped ahead of inflation data, which is expected to show that core consumer price inflation rose 0.3% month-on-month in March, down from the 0.4% rise in the previous month.
The data follows a stronger than expected jobs report last week and will be key to shaping expectations of when the Federal Reserve starts easing policy rates. Odds of a June rate cut by the Fed have fallen to 54%, down from about 63% a week earlier, according to CME’s FedWatch tool.
Indian rupee avoids record low despite slew of negative cues
The rupee may attempt to rise further from current levels but “it will not be an easy climb” as 83.10-83.12 continues to be a strong resistance zone for the currency, Apurva Swarup, vice president at Shinhan Bank India said.
Minutes of the Fed’s March policy meeting are also due later on Wednesday alongside remarks from Fed policymakers.
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