Nimesh Vora
MUMBAI (Reuters) – The Indian rupee had a quiet day on Thursday as traders awaited U.S. inflation data, which is key in predicting when the U.S. Federal Reserve will cut interest rates. It is expected that
Non-deliverable forwards suggest the rupee will open marginally higher against the US dollar from the previous trade of Rs 82.9225. The intraday range of the rupee in the last three sessions was less than 6 paisa.
“It’s going to be another blank day with no direction,” said a currency trader at a bank.
He said the Reserve Bank of India has “made it abundantly clear” that it does not want the rupee to appreciate significantly, but the only “prevalent” trade is selling USD/INR on appreciation.
Traders said the central bank is likely to have restrained capital inflows in recent days, especially in the late stages of trading. Trading volume over the past few minutes has been significantly higher than usual.
Asian currencies were mixed on expectations for US core consumer spending inflation, while the dollar index was little changed. This data will gain further interest following the rise in US consumer inflation in January.
Morgan Stanley expects core PCE inflation to be 0.43% m/m in January, 0.17% m/m in December, and 0.36% vs. 0.17% headline.
“If the data is released in line with our expectations, the three-month annualized pace of core PCE will be 2.7% in January, after 1.5% in December 2023,” the ministry said in a note. Stated.
“This acceleration is consistent with our expectation that the future path of inflation will be unstable, which will likely lead the Fed to postpone its first rate cut until June.”
Investors have already fully priced in a March Fed rate cut, and see a slim chance of a May rate cut. The probability of a June interest rate cut is nearly 50%.
Key indicators: ** 1 month non-deliverable rupee forward at 82.99
** Dollar index at $103.90 ** Brent crude futures at $83.62 ** 10-year US note yield at 4.28% ** Foreign investors bought $284 million in Indian stocks on February 27, according to NSDL data I bought it.
** According to NSDL data, foreign investors bought $142 million in Indian government bonds on February 27
(Reporting by Nimesh Vora; Editing by Mrigank Dhaniwala)
