off-the-wire

INDIA RUPEE-Indian rupee ends flat; investors brace for US inflation data

Kitco Media
By Reuters
Published:
Updated:
Reuters
By Sethuraman N R MUMBAI, May 10 (Reuters) - The Indian rupee closed nearly flat on Wednesday after struggling for direction throughout the session, while investors looked ahead to key U.S. inflation numbers, due later in the day. The rupee ended at 81.9850 to the dollar, against its previous close of 82.0375. The currency fell to an over two-week low in the previous session and also suffered its worst one-day percentage drop in nearly two months. Asian currencies were slightly weak, while the dollar index seesawed.


Markets are awaiting U.S. inflation data after the Federal reserve last week kept the door open for a pause in its aggressive tightening cycle. "U.S. inflation is mostly expected to be flat ... We are not expecting a sharp appreciation (in the rupee) as of now," said Gaurang Somaiya, FX and bullion analyst at Motilal Oswal. The rupee's downside, however, is also expected to be limited at around 82.40-82.50, he added.


Money markets are pricing in a roughly 80% chance that the Fed will pause rates at its next meeting in June, and expect at least a couple of rate cuts to follow before the end of the year. Broad U.S. dollar carry is still strong and requires higher rate and growth differentials elsewhere for dollar weakness to sustain, Emkay Global Economist Madhavi Arora said in a note. "We expect USD/INR to average 81.50 in FY24 and may see 79 per dollar during the year," she said. India's inflation data is also due later this week.
(Reporting by Nallur Sethuraman in Mumbai; Editing by Sonia Cheema)

Messaging: nallur.sethuraman.thomsonreuters.com@reuters.net))
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