While the local unit shuffled in a tight band in the first half of the session, bids from state-run banks pushed it lower towards the latter half, a foreign exchange trader at a private bank said.
“Expecting a decent-sized downmove (on USD/INR) post the U.S. CPI (consumer price index) data,” the trader added.
The inflation report for June, due later on Thursday, follows a string of soft U.S. economic data that has helped push up the odds of a September rate cut by the Federal Reserve to more than 73%, according to CME’s FedWatch tool.
Economists polled by Reuters forecast month-on-month core U.S. CPI holding steady at 0.2% in June.
Despite mostly soft economic data, Fed officials have urged caution on the future path of rate cuts.
Fed Chair Jerome Powell said on Wednesday that he was not ready to conclude that inflation is moving sustainably down to the central bank’s 2% target, though he has “some confidence of that.”
The dollar index was down 0.1% at 104.8 on Thursday while most Asian currencies rose on the day, with the Korean won up 0.4% and leading gains.
Investors will also keep an eye on U.S. jobless claims data and remarks from Fed officials slated to speak later in the day.
Weakness in the rupee may extend to 83.70 on a negative surprise on U.S. CPI, Abhilash Koikkara, head of forex and rates at Nuvama Professional Clients Group, said.
On the other hand, strength in the rupee should remain capped near 83.20-83.30, Koikkara added.
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