By Anushka Trivedi
MUMBAI, April 13 (Reuters) - The Indian rupee
strengthened to the psychologically critical 81.85-per-dollar
level on Thursday, as cooling U.S. inflation increased bets that
the Federal Reserve was near the end of its rate-hiking cycle
and weighed on the greenback.
The rupee finished up 0.28% at 81.85 per U.S.
dollar, having risen upto 81.8375 during the session. It ended
little changed for the week after rising for three straight
weeks.
India's financial markets are shut on Friday for a holiday.
The South Korean won jumped 1% on the day, while the
Indonesian rupiah rose 0.8% as the dollar index fell further to a two-month low, pressured by a surging euro with the European Central Bank expected to stay
hawkish for longer to battle still-high inflation.
Data overnight showed U.S. headline inflation softened in
March. The markets are now pricing in one last Fed rate hike, of
25 basis points, in May, followed by rate cuts from July. However, U.S. core inflation remained elevated in March,
which, analysts warned, could be a cause for concern.
"It seems that investors are very much welcoming the
forthcoming Fed easing cycle. They have a conviction call that
the dollar will weaken and are looking for opportunities," ING
analysts wrote in a note.
The minutes of the Fed's meeting in March revealed worries
about the banking crisis, with staff projecting a mild recession
later this year.
That seemed to weigh on Asian equities that mostly closed
lower, also dragged by a tech selloff in Hong Kong.
Meanwhile, data showed India's merchandise trade deficit
widened more-than-expected to $19.73 billion in March, after two
months of improvement.
Markets now await U.S. retail sales data on Friday to see
how consumer spending is being affected by higher prices.
(Reporting by Anushka Trivedi; Editing by Savio D'Souza)
anushka.trivedi.thomsonreuters.com@reuters.net))
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