MUMBAI: The Indian rupee is poised to open higher on Wednesday after the July U.S. inflation data indicated limited impact of tariffs, providing room for the Federal Reserve to cut rates next month.
The 1-month non-deliverable forward indicated the rupee will open in the 87.58-87.62 range versus the U.S. dollar, compared with Tuesday’s close of 87.7125.
The rupee may get “only modest relief” from the boost in Fed rate cut expectations, a currency trader at a Mumbai-based bank said.
Uncertainty over U.S. tariffs remains the dominant drag on sentiment, he noted, adding that the upcoming Trump-Putin summit is a key risk event that could sway the currency’s direction.
U.S. President Donald Trump and his Russian counterpart Vladimir Putin will meet this Friday in Alaska to hold discussions on halting the war in Ukraine.
The upcoming Putin-Trump meeting takes on added significance for the rupee amid the recent escalation in U.S. tariffs on India over its purchase of Russian oil.
The outcome could shape expectations on whether trade tensions will ease or deepen.
Any sign of a thaw between Washington and Moscow could open the door for tariff relief, offering the rupee breathing space, traders said.
Dollar, US yields drop
The dollar index dropped on Tuesday and near maturity U.S. yields declined after the highly-anticipated U.S. July inflation reading indicated Trump’s tariff regime had yet to filter down to consumer prices.
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