Updated January 25th, 2024 at 16:25 IST
Rupee ends rangebound session on a flat note against US dollar
Investors are closely monitoring the US Federal Reserve's actions, with a 56 per cent probability of interest rates remaining unchanged in March.
Rupee saw minimal movement against the US dollar, closing at 83.1150, a slight deviation from its previous close at 83.1225. Throughout the day, the currency maintained a narrow range, and traders eagerly awaited key indicators to determine its directional momentum.
Despite a brief rally earlier in the month, where the rupee reached 82.77, it has since faced challenges, witnessing a marginal weekly loss of 0.06 per cent. Factors such as equity outflows and the strengthening of the US dollar, fueled by reduced expectations of aggressive rate cuts, have contributed to this trend.
Dilip Parmar, a foreign exchange research analyst at HDFC Securities, noted that the rupee appears to be signaling a sideways momentum with a slight downward bias. While a move above 83 in the short term seems improbable, downside risks are limited in the range of 83.30-83.35, as suggested by a foreign exchange trader at a private bank.
The dollar index saw a minor decline to 103.16, impacting most Asian currencies. The Indonesian rupiah led losses, dropping by 0.7 per cent. Overall, the rupee's trajectory reflects a cautious market sentiment amid a mixed investment environment.
Investors are closely monitoring the US Federal Reserve's actions, with a 56 per cent probability of interest rates remaining unchanged in March, up from 44 per cent the previous week, according to CME's FedWatch tool. ING Bank cautioned that the current investment landscape is characterized by mixed signals, emphasizing the potential risks associated with strong conviction views.
Looking ahead, market participants are awaiting US GDP data for the October-December quarter, projected to reveal 2 per cent year-on-year growth, a decline from the previous quarter's 4.9 per cent, as per a Reuters poll. Additionally, attention is on the forthcoming personal consumption expenditure inflation data, the preferred inflation gauge of the Federal Reserve, scheduled for release on Friday. It remains to be seen how these economic indicators will influence the trajectory of the Indian rupee in the coming days.
(With Reuters inputs)
Published January 25th, 2024 at 16:25 IST