The rupee reaches a two-week peak
On Wednesday, the Indian rupee surged, supported by an uptick in risk appetite that boosted other Asian currencies. Additionally, forward premiums for the dollar-rupee pair edged upwards. At 10:15 a.m. IST, the rupee stood at 83.27 against the US dollar, marking its highest point since April 10 and surpassing its previous session close of 83.3425.
On Tuesday, the dollar index saw a drop, reaching 105.6 in its latest quote. Meanwhile, the Korean won and Indonesian rupiah each saw a 0.4 percent increase, leading to the gains among the rupee’s counterparts in Asia. US PMI data released on Tuesday indicated a slowdown in business activity to a four-month low in April, attributed to reduced demand, consequently pushing the dollar down by close to 0.4 percent.
Dilip Parmar, a foreign exchange research analyst at HDFC Securities, anticipates a potential uptrend for the rupee following a notable recovery in risk assets over the past two days. He suggests that the rupee might fluctuate within a range of 83.20 to 83.50 in the short term. Meanwhile, forward premiums for the dollar-rupee pair have increased, with the 1-year implied yield rising by 2 basis points to 1.68 percent.
According to a foreign exchange trader at a state-run bank, while weak data from the US typically stimulates some interest in paying, the broader trend indicates a preference for receiving on upticks, especially in far forwards.
Investors are now awaiting the release of US GDP data on Thursday and personal consumption expenditure (PCE) inflation data on Friday, which could provide insights into the potential timeline for rate cuts by the US Federal Reserve.
According to Reuters’ polls, it’s anticipated that US GDP growth slowed to 2.4 percent in the January-March quarter from the previous quarter’s 3.4 percent. Meanwhile, core PCE inflation is expected to have remained unchanged at 0.3 percent month-on-month in March.
