On Tuesday, June 18, the Indian rupee strengthened, supported by dollar sales from state-run banks, likely acting on behalf of merchant clients. However, traders anticipate that the rupee’s gains will be limited as importers might intervene to cover their hedging needs.
The rupee was trading at 83.47 against the US dollar (Dh 22.47) at 10:00 a.m. IST, marking a 0.08% increase from its previous close of 83.55 (Dh 22.76) on Friday.
Indian financial markets were closed on Monday due to a holiday. “We anticipated bids following the lower opening (on USD/INR), but state-run banks are offering dollars,” a foreign exchange trader at a foreign bank noted, suggesting that these dollar offers were likely tied to client orders.
Dilip Parmar, a foreign exchange research analyst at HDFC Securities, predicted that the rupee would remain within a range of 83.40 to 83.70 this week. “We expect minor depreciation before the rupee strengthens,” he added.
Meanwhile, the dollar index rose by 0.1% to 105.4 during Asian trading hours, with Asian currencies mostly rangebound ahead of the U.S. retail sales data release later in the day. This report could impact expectations regarding the timing of the Federal Reserve’s policy rate adjustments.
Philadelphia Fed President Patrick Harker mentioned on Monday that he believes one rate cut would be appropriate by the end of the year, considering his base case of slowing but above-trend economic growth, a modest rise in unemployment, and a gradual return to target for U.S. inflation.
While recent data suggests that U.S. inflation may be cooling, Fed officials have remained cautious about the future path of interest rates.
Investors will also be closely watching comments from several Fed policymakers later in the day.
