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Updated January 10th, 2024 at 16:44 IST

Rupee strengthens for sixth consecutive session amid expected foreign inflows

While Asian currencies faced downward pressure in response to the Dollar index's climb to 102.60, the Indian Rupee's robust performance stood out.

Business Desk
Rupee closes slightly higher, supported by dollar inflows
Rupee versus Dollar | Image:Republic
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Rupee versus Dollar: The Rupee showcased resilience by recovering early losses to secure gains for a sixth straight session, driven by anticipated foreign inflows. Closing at 83.0350 against the US Dollar, it marked its highest level since December 15, surpassing the previous session's close of 83.1150.

Starting the day on a lower note and reaching an intraday low of 83.18, the local currency rebounded to reach an over three-week high of 82.98. Traders attributed this surge to substantial Dollar selling by a major UK-based bank, speculated to be external commercial borrowing inflows.

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"Dollar inflows have kept the Rupee the top performer among Asian currencies," remarked Dilip Parmar, a foreign exchange research analyst at HDFC Securities. However, Parmar cautioned about the sustainability of this trend, considering the Reserve Bank of India's historical approach to managing such inflows.

While Asian currencies faced downward pressure in response to the Dollar index's climb to 102.60, the Indian Rupee's robust performance stood out.

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Looking ahead, investors are eyeing US consumer inflation data scheduled for Thursday. Economists predict a 0.3 per cent month-on-month increase in core CPI for December, with a year-on-year expectation of 3.8 per cent, a slowdown from November's 4 per cent. A report aligning with expectations could boost confidence in anticipated rate cuts by the Federal Reserve, currently projected to commence in March.

Investors are pricing in a nearly 66 per cent chance of rate cuts starting at the March meeting, as indicated by the CME FedWatch Tool. The US inflation data release will serve as a crucial factor in validating current interest rate expectations.

(With Reuters inputs.)

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Published January 10th, 2024 at 16:44 IST

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