Indian rupee faces pressure ahead of US inflation data

The Indian rupee is teetering on the edge of a new all-time low against the US dollar ahead of key events in the United States.

Non-deliverable forward (NDF) contracts indicate the rupee could open on Wednesday at 83.58-83.60 per dollar, surpassing its previous record low of 83.5750 set in April.

Investors are awaiting the US Federal Reserve’s policy decision later on Wednesday, with new interest rate forecasts also in focus. The Fed is widely expected to maintain current rates, but the tone of their projections could impact currency markets.

A hawkish stance from the Fed, potentially hinting at less aggressive future rate cuts, could strengthen the dollar and put further pressure on the rupee and other Asian currencies.

US inflation data for May will be released before the Fed meeting. Economists predict continued underlying inflation, potentially keeping the Fed cautious about rate cuts.

Notably, foreign investors purchased a net $343.5 million worth of Indian shares on June 10. Conversely, foreign investors sold a net $17.7 million worth of Indian bonds on June 10.

The Reserve Bank of India (RBI) potential intervention and the Fed’s monetary policy stance will be key factors determining the rupee’s trajectory.

Attribution: Reuters