Finance
Due in part to a minor increase in the offshore Chinese yuan and a decline in the dollar index, the Indian rupee ended the day on Wednesday slightly higher.After closing at 83.15 in the previous session, the rupee closed at 83.1225 versus the US dollar.The dollar index fell 0.4% to 103.07, and the majority of Asian currencies experienced weakness. After the country’s central bank said that it will reduce the amount of cash that banks must retain as reserves to support the economy, the offshore Chinese yuan saw a 0.1% increase.
It’s a “bit of a confused market with not much directional conviction on either side,” said Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors, referring to the rupee’s subdued moves in recent sessions.Since hitting an over-four-month peak of 82.77 on Jan. 15, the currency has weakened to hover between 83.0575 and 83.18 over the last week, pressured by equity-related outflows and the paring of expectations of aggressive U.S. rate cuts.
According to CME’s FedWatch tool, investors are almost evenly divided on whether the Federal Reserve will lower rates at its policy meeting in March, which is a significant change from the odds of more than 75% in late December.Before the Fed makes its policy decision later this month, the rupee is not expected to witness significant swings on either side, according to a foreign exchange dealer with a foreign bank. Most market participants believe that the Fed will hold its interest rates steady during the meeting.
“Even then, I doubt it’ll move much unless the Fed is surprisingly hawkish or dovish,” the trader added.Heading into the Fed meeting, investors will keep an eye on U.S. GDP data due on Thursday and the closely watched core personal consumption expenditure (PCE) inflation data due on Friday.
Source:FE
