Mumbai: The Indian rupee held an extremely narrow trading range on Thursday, as traders awaited U.S. consumer inflation data to gauge the next leg of the local unit’s direction.
The rupee was trading at 82.3175 by 0510 GMT, barely changed from 82.3150 in the previous session.
The local unit has traded in an about eight paisa range so far, replicating the narrow ranges in the previous two session.
The rupee dropped to a record low of 82.6825 on Monday, but has managed to recover slightly, thanks to likely intervention by the Reserve Bank of India, which offset trading volatility.
While it was difficult to pin down the extent of the RBI’s interventions in spot and forwards, traders said it has been fairly large, especially on Monday and Tuesday.
Estimates of the extent of the RBI’s dollar sales range from $1.5 billion per day to as high as $4 billion.
The focus now shifts to U.S. inflation data due later in the day. U.S. consumer prices are expected to have climbed 8.1% year-on-year last month, while the core inflation rate is projected at 6.5%, according to economists polled by Reuters.
If core CPI climbs to 6.5%, U.S. equities are likely to fall, while the dollar index could jump to its previous high of 114.80, and this could lead the rupee to test a new low of around 82.70 per dollar, and even move towards 83, said Amit Pabari, managing director at CR Forex Advisors.
If core CPI remains near 6.3%, the rupee would appreciate up to 81.80 levels, Pabari said.
The dollar index was hovering near 113.28 and Asian currencies were mixed. Risk appetite in Asia was weak. -Reuters
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