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Updated January 4th, 2024 at 17:21 IST

Rupee closes slightly higher, supported by Dollar inflows

Fed hinted at growing confidence in inflation control without explicitly signalling the timing of potential rate cuts.

Business Desk
Rupee closes slightly higher, supported by dollar inflows
Rupee closes slightly higher, supported by dollar inflows | Image:Republic
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Rupee received a boost: The Rupee displayed a marginal strengthening on Thursday, buoyed by Dollar inflows, defying the broader trend where several Asian currencies faced downward pressure due to recalibrated expectations of US rate cuts.

Closing at 83.23 against the US Dollar, the Rupee edged 0.05 per cent higher compared to its previous session's close of 83.3. Meanwhile, the Dollar index experienced a slight decline to 102.14 after reaching a more-than-two-week high in New York, supported by increased US yields and a subdued risk appetite.

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Trading within a narrow band for most of the session, the Rupee received a boost from Dollar inflows post the mid-day fixing window, noted a foreign exchange trader at a private bank. However, persistent Dollar buying by state-run banks kept the Rupee's gains in check.

Market appeared flat

While the Rupee maintained its range-bound movement, Abhilash Koikkaraa, head of forex and rates at Nuvama Professional Clients Group, remarked that the market appeared flat. Assessing the overall trend remains challenging until a breakout occurs on either side.

The Federal Reserve's minutes from the December meeting hinted at growing confidence in inflation control without explicitly signalling the timing of potential rate cuts. Richmond Federal Reserve President Thomas Barkin expressed optimism, noting progress in controlling inflation and the prospect of a softer landing.

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Investor attention now turns to upcoming US economic data, starting with initial jobless claims, followed by critical non-farm payrolls and unemployment data on Friday. Projections from a poll anticipate a marginal uptick in the unemployment rate to 3.8 per cent in December from November's 3.7 per cent. These indicators are expected to provide clearer insights into the trajectory of the US economy and subsequent monetary policy decisions.

(with Reuters inputs)

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Published January 4th, 2024 at 17:21 IST

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