The Indian rupee displayed a slight uptrend on Tuesday, driven by inflows and maintaining its positive momentum leading up to the crucial US consumer inflation data release. At 10:55 a.m. IST, the rupee stood at 82.7425 against the US dollar, a marginal increase from the previous session’s 82.7575. Within a narrow 3 paisa range, the rupee achieved a more than six-month high on Monday.
Analysts note a noteworthy trend of importers actively hedging in recent days, indicating a cautious approach amid the rupee’s fluctuation. A foreign exchange salesperson at a private bank shared insights, stating, “At least from our side, we have seen a good number of importers hedging in the last few days. I think we can extrapolate that to other banks. The perception that the rupee is a range-bound currency suggests that significant dips and rallies will prompt increased hedging activity.”
While the rupee exhibited stability, other Asian currencies experienced a mostly lower trend ahead of the eagerly awaited US inflation data. The upcoming February inflation figures are anticipated to provide insights into whether January’s elevated readings were a transient anomaly or indicative of a more enduring price trend. According to economists surveyed by a news agency, expectations for US headline inflation are a 0.4% increase and a 0.3% rise for the core inflation metric.
The market’s reaction to the US inflation data will likely influence the trajectory of the rupee and other regional currencies. The rupee’s recent resilience, coupled with strategic hedging practices, underscores the cautious optimism prevailing in the foreign exchange market. Traders and investors remain vigilant as they await the unfolding economic indicators that will shape currency dynamics in the near term. The rupee’s role as a pivotal player in the global currency landscape continues to be closely monitored amid ongoing market fluctuations and external economic developments.
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