Rupee may fall more before critical U.S. inflation statistics. After falling below a critical threshold in the previous session, the Indian rupee may fall further on Wednesday ahead of crucial U.S. inflation data.
Non-deliverable futures suggest the rupee will start at 82.08–82.10 to the U.S. dollar, down from 82.0375 in the previous session.
On Tuesday, the rupee fell past 81.95-82, which dealers considered USD/INR pair barrier. Traders said importer hedging, dollar outflow, and stop-losses caused the currency to drop past 82.
“After yesterday’s session, you would have to say the bias (on USD/INR) has shifted slightly to the upside,” a senior sales official said.
“Today, it will be about how much follow through there is and then obviously the U.S. inflation data will be crucial for the dollar’s direction.”
Reuters economists predict the U.S. core inflation rate to climb 0.4% in April, mirroring March’s pace. In addition, 5% annual headline inflation is projected.
Data lagged risk assets. Asian stocks followed the overnight U.S. decline.
“Anxiety may be building ahead of today’s inflation figures out of the U.S., where progress lower is likely to be limited, non-existent or even possibly go into reverse,” ING Bank wrote.
The 2-year U.S. yield rose to 4.07% overnight. Nearly 80% of the U.S. Federal Reserve will halt.
On Tuesday, U.S. President Joe Biden and House of Representatives Speaker Kevin McCarthy disagreed on expanding the $31.4 trillion debt limit.
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