Rupee Gains As Dollar Steadies Ahead Of Key US Inflation Report

The rupee gained early as the dollar steadied ahead of a key US inflation report.

Rupee Gains As Dollar Steadies Ahead Of Key US Inflation Report

Rupee gains to 79.52 per dollar in early trade

The rupee gained early on Wednesday as the dollar steadied ahead of a key US inflation report, which would give an indication of the Federal Reserve's monetary policy path.

Bloomberg showed the rupee was last changing hangs at 79.5350 per dollar, a gain of about 12 paise from its previous close of 79.6550 on Monday.

PTI reported that the Indian currency rose 11 paise to 79.52 against the US dollar in early trade.

At the interbank foreign exchange, the rupee opened at 79.59 against the US dollar and touched 79.52 in initial deals, registering a rise of 11 paise over the last close. In the previous session on Monday, the rupee had closed at 79.63 against the greenback.

Indian financial markets were closed on Tuesday on account of Muharram.

Forex traders said sideways USD/INR trades are likely ahead of crucial US inflation data.

Asian currencies are stable to slightly weak, awaiting the data. Dips in USD/INR are getting bought as uncertainty, on inflation, war and hikes by US Fed remain," Bhansali said, adding that the range for the rupee is 79.40 to 79.80.

"Exporters may sell near to 79.80 levels while importers may buy near to 79.40 to hedge their month-end payables," Bhansali added.

The broader risks point to volatile session ahead. 

 "There's a lot of global issues and we cannot ignore them and that puts a lot of downward pressure on global growth," Juan Perez, director of trading at Monex USA, told Reuters referring to the dollar's safe haven appeal.

 Wednesday's US Consumer Price Index report is expected to show that decades-high inflation eased in July following back-to-back 75-basis point hikes by the Fed in June and July.

But data on Friday showed that US employers hired far more workers than expected last month, with wages still rising at a strong clip, boosting bets for another mammoth rate hike by the Fed at its September 20-21 meeting.

Money-market futures show traders see about a two-thirds chance of a 75 bps hike next month.

"We've been getting consistently hotter-than-expected inflation reports and if that happens again, the market is not prepared for that," Edward Moya, senior market analyst at Oanda, told Reuters. "If that happens, we're testing parity again against the euro," he said of the potential for more dollar strength.

Domestic benchmark equities opened lower, tracking losses in Wall Street and broader Asia bourses, but capital inflows is likely to limit the damage for Indian assets.

Foreign institutional investors were net buyers in the capital market on Monday, purchasing shares worth Rs 1,449.70 crore, per the latest exchange data.