The rupee has been “well-supported,” by dollar inflows over the last week
The Indian rupee ticked up on Friday aided by a pullback in the U.S. dollar after economic data came in weaker than expected, but demand for the greenback from local oil companies is likely to limit the currency’s gains, traders said.
The rupee was at 83.01 against the U.S. dollar as of 10:00 a.m. IST, slightly higher compared to its close at 83.0425 on Thursday.
The dollar index was last quoted at 104.42 after dropping 0.4% on Thursday following data which showed that U.S. retail sales fell by the most in 10 months in January and the figures for November and December were revised lower.
The rupee has been “well-supported,” by dollar inflows over the last week, which helped cap the local unit’s weakness around 83.10-83.12, a foreign exchange trader at a state-run bank said.
Local oil companies have been buying dollars over the last couple of sessions which is expected to persist on Friday, capping the rupee’s gains, the trader added.
Meanwhile, India’s merchandise trade deficit moderated to a nine-month low at $17.5 billion in January, while the services surplus rose to $16.8 billion, data released during market hours on Thursday showed.
“Steady appreciation (of the rupee) may continue as Indian trade data were also encouraging,” Dilip Parmar, a foreign exchange research analyst at HDFC Securities said.
Despite weakness on Thursday, the dollar index is headed for its fifth straight weekly gain, boosted by a paring of bets on aggressive rate cuts by the U.S. Federal Reserve.
While markets had strongly expected U.S. rate cuts to begin by March at the start of 2024, those bets have been pushed to June with the odds of a rate cut in March and May falling to about 10% and 34%, respectively, according to CME’s FedWatch tool.
Source : Zawya
