The dollar index was stable near 104, while the offshore Chinese yuan dropped almost 0.1% to 7.2239
The Indian rupee edged higher on Monday amid muted early trading, with most Asian markets shut, and as traders await fresh cues from the release of inflation data in India and the US.
The rupee was at 82.9925 against the U.S. dollar as of 09:45 a.m., marginally stronger than its previous close at 83.0350.
The dollar index was stable near 104, while the offshore Chinese yuan dropped almost 0.1% to 7.2239. Most Asian markets, including Japan and China, were shut on Monday on account of local holidays.
The rupee is likely to stay in its 10-paisa corridor on either side of the 83-handle during the day, according to a foreign exchange trader at a private bank.
Trading volumes were also muted early in the session, the trader further said.
The focus remains on when the U.S. Fed may begin easing policy rates, with Tuesday’s inflation data likely to shape expectations around the timing of the first cut.
Investors are currently pricing in a 37.5% probability that the Federal Reserve will keep rates unchanged in May, up from around 27% as of February 2.
Meanwhile, India will report consumer price inflation data later in the day which is expected to show that retail inflation eased to a three-month low of 5.09% in January, as per economists polled by Reuters.
While fundamentals are supportive of the rupee, meaningful appreciation is likely only “once it successfully maintains levels above 82.80”, according to Amit Pabari, MD at FX advisory firm CR Forex.
Remarks from U.S. Federal Reserve policymakers will also be key to watch later in the day as they could provide insight into how officials are thinking about the future trajectory of policy rates.
