MUMBAI, May 15 (Reuters) – The Indian rupee was mildly stronger on Wednesday, aided by gains in most Asian currencies ahead of a key U.S. inflation report which is expected to influence investor expectations of when the Federal Reserve will begin to cut policy rates.
The rupee was at 83.49 against the U.S. dollar as of 10:05 a.m. IST, marginally higher than its previous close at 83.51.
The dollar index was down 0.1% at 104.9, while most Asian currencies rose. The offshore Chinese yuan was up nearly 0.2%, while the Philippine peso was up 0.4%, leading gains.
Mild dollar sales from foreign banks also aided the rupee in early trading, a foreign exchange trader at a state-run bank said.
“Dips (on USD/INR) are mostly shallow and then too you see demand from importers. Don’t expect it to move below 83.45,” the trader added.
The rupee has also been under pressure as foreign investors have remained net sellers of Indian equities over most trading sessions in May, having sold about $3 billion of equities so far.
Economists polled by Reuters expect the closely watched core CPI to rise by 0.3% in the month, down from 0.4% in March. Investors are currently pricing in a nearly 65% chance of a Fed rate cut in September, according to the CME’s FedWatch tool.
U.S. CPI data is unlikely to shift the rupee out of its prevailing range, but a soft print may trigger mild appreciation in the currency, Dilip Parmar, a foreign exchange research analyst at HDFC Securities said.
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Reporting by Jaspreet Kalra; Editing by Sohini Goswami
Our Standards: The Thomson Reuters Trust Principles.
