Finance
The Indian rupee surged on Wednesday as the dollar fell ahead of US inflation data, with the local currency approaching a zone that dealers predicted would be difficult to overcome. The rupee was trading at 82.29 per US dollar, up from 82.3650 the previous day. The rupee has been on a recovery path as a result of the dollar’s depreciation since the release of non-farm payrolls data in the United States on Friday.
A forex broker said it is “difficult to see” the USD/INR falling below 82.20-82.30, the resistance-turned-support zone, and that short-term speculators and importers are likely to step in. The dollar index fell to a two-month low of 101.38 during Asian trade hours. This boosted Asian currencies by 0.1% to 0.3%.
According to a Reuters poll of experts, data due later in the day will show that both the headline and core U.S. consumer price index gained 0.3% month on month in June. The headline and core CPIs are estimated to have risen 3.1% and 5%, respectively, year on year. The inflation reading comes less than two weeks before the Federal Reserve meeting in the United States, where a 25 basis point rate hike is generally anticipated.
“If the consensus is correct about headline and core inflation rising by 0.3% month-on-month, the Fed will not be convinced that inflation can return to its 2% target this year,” DBS Research said in a note. India’s June inflation data, due about half an hour before the U.S. data, is expected to have risen 4.58% on-year from 4.25% in May, according to a Reuters poll. The rupee forward premiums were mostly unchanged before the U.S. and India data. The 1-year implied yield was at 1.64%.
Source:FE
