MUMBAI: The Indian rupee ended little changed on Wednesday as a slight recovery in the greenback offset the positive momentum from dollar sales by exporters.
The rupee ended at 83.17 against the US dollar, barely changed from its close at 83.18 in the previous session.
However, the local unit may see “mild appreciation,” over the next few days, a foreign exchange trader at a foreign bank said.
There has been an increase in dollar sales from exporters, the trader said, adding that there is “strong dollar selling interest on moves near 83.25.”
The dollar index rose to a high of 102.34 in Asian trading hours, aided by the weakness in the British pound, which fell after data showed inflation in England declined to its lowest rate in over two years in November.
Despite ticking up on Wednesday, the dollar has been under pressure amid expectations that the Fed will cut policy rates next year.
Investors are pricing in about 150 basis points of rate cuts over 2024, per CME Group’s FedWatch tool, despite some resistance from Fed officials, including New York Fed President John Williams, who deems questions about rate cuts “premature.”
It’ll be key to see if the rupee falls and sustains below 83.20 in the near-term, Arnob Biswas, head of foreign exchange research at SMC Global Securities said.
The local unit is likely to maintain a slight appreciation bias above 83.20, but a decline below this level could push the rupee back to its 83.30-83.40 range, Biswas added.
Investors will also monitor US personal consumption expenditure (PCE) inflation due on Friday, which is expected to show that month-on-month core PCE inflation remained flat at 0.2% in November, according to a Reuters poll.
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