Closing at 82.7675 compared to 82.7575 in the previous session, the rupee traded within a tight range of 82.7250 to 82.7725 throughout the day
The Indian rupee remained relatively stable following a day of limited movement on Tuesday, as investors awaited key U.S. consumer inflation figures to determine the potential timing of interest rate adjustments by the Federal Reserve.
Closing at 82.7675 compared to 82.7575 in the previous session, the rupee traded within a tight range of 82.7250 to 82.7725 throughout the day.
The Indian currency has been a beneficiary of persistent foreign inflows in the country’s debt and equity markets but dollar purchases from importers and possible intervention by the central bank have limited gains, according to traders.
Technically, the rupee is expected to consolidate between 82.52 to 83.05 with a positive bias, Dilip Parmar, a foreign exchange research analyst at HDFC Securities, said.
While foreign inflows are expected to remain favourable for rupee bulls, any risk-averse sentiment and likely dollar purchases by the central bank will limit the rupee’s rise, he added.
The upcoming data release is anticipated to reveal a 0.4% increase in U.S. headline inflation and a 0.3% rise in core inflation for the month of February.
This information will be crucial in determining whether the higher inflation reported in January was merely a temporary anomaly or if price hikes are becoming more sustained.
If core inflation is on expected lines, there may not be a big market impact but “it could definitely set the tone for a more defensive stance on forex – i.e., a gradual rotation back to the dollar – ahead of next week’s Fed meeting,” ING Bank said in a note.
In anticipation of the data, investors are factoring in a total of 90 basis points in Federal Reserve rate cuts by the year 2024.
Meanwhile, Asian currencies experienced a general decline in value ahead of the data release, with forward premiums for the dollar-rupee pair also decreasing.
