Rupee to rise as dollar weakens

The Indian rupee is expected to open slightly higher on Monday due to the dollar’s weakness against major currencies ahead of the U.S. inflation data that are due to be released later on Tuesday, Reuters reported.

Non-deliverable forwards suggest the rupee will open at around 82.99-83.01 to the U.S. dollar, compared with 83.0350 in the previous session. The dollar index was down at 103.99, and several Asian markets were closed for a holiday.

Last week, the rupee traded in the 82.88-83.07 range, an FX trader at a bank said,

“Last week’s range of about 10 paisa on either side of 83.00 is more than likely until at least we know the U.S. inflation numbers,” an FX trader at a bank said. Even after the data, the range may only expand by about 20 paisa on either side.

The U.S. consumer prices are expected to rise by 0.2 per cent month-on-month, with the core measure increasing 0.3 per cent. This data follows a strong U.S. jobs report and signals from Federal Reserve officials against imminent rate cuts, which have tempered expectations for a rate cut at the March meeting.

The U.S. Labor Department’s annual consumer price index revisions showed a downward revision in the December headline inflation rate and slight upward revisions to the November and October prints. “The revisions do not alter the pace of disinflation and are unlikely to change the Fed’s views,” ANZ said in a note.

India’s December inflation data is due Tuesday and is expected to show retail inflation rose by 5.09 per cent, the slowest pace in three months.