The Indian rupee is poised to open slightly higher, driven by the dollar’s weakened stance against major currencies leading up to the U.S. inflation data release. Projections from non-deliverable forwards suggest the rupee may begin trading around 82.99-83.01 against the U.S. dollar, a minor increase from the previous session’s 83.0350. The dollar index retreated to 103.99, with several Asian markets observing a holiday.
After a week marked by losses, where the rupee fluctuated within the 82.88-83.07 range, attention turns to Tuesday’s data release, anticipating a 0.2% month-on-month increase in U.S. consumer prices. The core measure, considered more pivotal, is expected to show a 0.3% rise. This data follows a robust U.S. jobs report and statements from Federal Reserve officials resisting immediate rate cuts. These factors have dampened expectations for a rate cut at the upcoming March meeting. The U.S. Labor Department’s annual consumer price index revisions, published on Friday, revealed a downward revision in the December headline inflation rate, along with slight upward adjustments to the November and October figures.
Simultaneously, India awaits its December inflation data, scheduled for later in the day. Projections suggest a 5.09% increase in retail inflation, marking the slowest pace in three months.
As global economic indicators unfold, the juxtaposition of U.S. and Indian inflation figures adds complexity to the currency markets. The U.S. Fed’s cautious stance and revisions in inflation data contribute to the nuanced landscape. For India, the slower retail inflation pace may influence the Reserve Bank of India’s policy decisions in the coming months, shaping market expectations.
Market participants keenly observe these developments, as the interplay between global economic events and domestic factors holds implications for currency movements and monetary policy decisions. The week ahead is poised to offer further insights into the trajectory of both the Indian rupee and global currencies in response to economic data releases and central bank statements.
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