Rupee Closes Flat Against Dollar Ahead Of US CPI Data
The rupee appears to be holding steady within a well-defined range, as the RBI continues to manage both appreciation and depreciation.
The Indian rupee closed flat against the dollar on Wednesday as the markets wait for US inflation data to be released later in the day. Crude oil fell below $70 per barrel for the first time in two years in the previous day, which supported the greenback.
The Indian currency closed at Rs 83.97 against the dollar, according to Bloomberg data. The domestic currency had closed at Rs 83.98 on Tuesday.
The rupee appears to be holding steady within a well-defined range as the Reserve Bank of India continues to manage both appreciation and depreciation, said Amit Pabari, managing director of CR Forex Advisors.
"The central bank has been actively absorbing inflows, as reflected in its soaring foreign reserves, which have reached a record high of $684 billion—up by $60 billion year-to-date. This highlights the RBI's resilient management of the rupee," he said.
In the short term, notable inflows are expected. The State Bank of India is set to raise $0.90 billion through the issuance of Tier-2 bonds next week, while the Indian Bank plans to raise $0.60 billion via infra-bonds, Pabari said. "Consequently, in the short term, we expect the rupee to trade within a range of approximately 83.80 to 84.05 against the dollar."
The US dollar index was trading 0.19% lower at 101.43 at 3:39 p.m. Brent crude was trading 2.33% higher at $70.80 per barrel at 3:40 p.m.
The CPI could establish a pivotal baseline for the market's outlook on the scale of the Federal Reserve’s rate cuts, with currency movements hanging in the balance, Pabari said. "If inflation data aligns with expectations, we could witness softness in the dollar index, potentially driving it below the 101 mark, which would provide support for emerging market currencies."