The rupee finished the session at 82.7550 per U.S. dollar in a low-volume session, compared to 82.7175 in the previous session. The local currency had opened at 82.58. Volumes on the interbank order matching system were $4.6 billion, compared to the daily average of $6.7 billion year-to-date.
Rupee forward-premiums inched up following higher-than-expected India inflation print for January, making it more likely that the Reserve Bank of India would raise rates again in April. The 1-year rupee implied forward rate rose to 2.12%. Activity from both corporate clients and proprietary desks were muted, a trader at a private sector bank said, adding that a lack of momentum on either direction was keeping volumes low. The rupee's Asian peers rose on Tuesday while the dollar index declined to 103.04 ahead of data that is seen key in gauging what the Federal Reserve is likely to do next on interest rates. Headline and core U.S. consumer prices rose 0.4% and 0.5% month-on-month, according to economists polled by Reuters. The data follows a U.S. jobs report that prompted a repricing of the Fed's terminal rate expectations.
"The principal focus will be core CPI where our economists expect a 0.43% month-on-month reading," Morgan Stanley said in a note. (Reporting by Nimesh Vora; Editing by Nivedita Bhattacharjee)
