The Indian rupee is poised for an upswing on Thursday, thanks to a retreat in oil prices and softer US Treasury yields. Investors are keenly awaiting significant US inflation data scheduled for release later.
Non-deliverable forwards hint at the rupee’s marginal gain as it opens slightly higher than the previous session’s 83.1875 mark. This positive outlook is influenced by several factors, including the dip in Brent crude oil prices to $85.40 per barrel in Asia. The decrease in oil prices follows a 2% drop on Wednesday, driven by the unexpectedly substantial increase in US inventories.
Brent crude had experienced a considerable surge due to the military conflict in the Middle East but has since retracted to be only about 1% higher than its pre-crisis levels. The reduced pressure on oil prices indicates that there may not be an upward breakout on the USD/INR (US Dollar to Indian Rupee) exchange rate.
A spot forex trader at a mid-sized private sector bank commented, “Expect a trading range of 83.10-83.20 today before we see the US and India inflation prints.” Meanwhile, India’s inflation data is anticipated to be released after market hours.
Simultaneously, the US awaits the release of the headline US Consumer Inflation Index (CPI), with an expected 0.3% month-on-month increase. Economists polled by Reuters anticipate a similar growth rate for the more crucial core measure.
These developments follow investor sentiment influencing a decreased likelihood of a Federal Reserve rate hike at the upcoming meeting, now at less than 10%. Statements from Fed officials suggesting that the rise in long-term US yields might prevent the need for a policy rate increase have impacted the outlook for the forthcoming October 31 to November 1 meeting.