Indian Rupee Holds Steady Ahead of US Inflation Data

Traders expect a tight trading range for the Indian rupee as they await crucial US inflation figures and the Federal Reserve meeting.

At 8:45 AM UAE time, the Indian rupee stood at 83.3650 against the US dollar (22.72 against UAE dirham), marking a 0.03 percent rise from its previous close at 83.3925.

Dollar Index and Asian Currencies:

The dollar index remained steady at 103.97, while several Asian currencies declined, notably the Thai baht, which fell by 0.8 percent.

Amit Pabari, managing director at CR Forex, notes the rupee’s remarkably narrow trading range, suggesting the need for significant events or considerable flows to induce a shift.

Rupee’s December Performance:

In December, the rupee fluctuated between 83.2475 and 83.40, with the Reserve Bank of India intervening multiple times near the 83.40 mark to curb losses, as reported by traders.

Forex traders at a private bank foresee minimal action on the rupee pending the release of US inflation data and the Fed’s policy outcome.

US and India Inflation Data:

US core CPI figures, anticipated to rise to 0.3 percent month-on-month in November, are set to be released. Meanwhile, India’s year-on-year CPI is expected to climb to 5.7 percent in November.

Fed’s Decision and Market Expectations:

The Federal Reserve is expected to maintain unchanged rates in its upcoming meeting, but investors eagerly await the Fed’s projections and comments for insights into future policy rates.

Per CME Group’s FedWatch tool, Fed futures are currently priced at approximately 125 bps of rate cuts through 2024.