Written by Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee ended slightly weaker on Thursday, weighed down by dollar demand from state-run banks and importers, although most Asian countries rose ahead of a key U.S. inflation report.
The rupee ended at 83.56 rupees against the US dollar, slightly weaker than the previous close of 83.52 rupees.
Foreign exchange traders at private banks said local companies were close in the first half of trading, but fell in the second half due to bidding by state-owned banks.
The trader added, “Following the US CPI (Consumer Price Index) data, we expect (USD/INR) to decline by a certain amount.”
The June inflation report, due later Thursday, comes on the heels of a series of weak U.S. economic data that boosts the odds of a September interest rate cut by the Federal Reserve by more than 73%, according to CME’s FedWatch tool. This was a contributing factor.
Economists polled by Reuters expect U.S. core CPI to be flat at 0.2% in June from the previous month.
Despite mostly weak economic data, Fed officials are urging caution about future rate cuts.
Fed Chairman Jerome Powell said Wednesday that he is not ready to conclude that inflation is sustainably falling to the central bank’s 2% target, but that he has “some confidence in it.”
On Thursday, the dollar index fell 0.1% to 104.8, but most Asian currencies rose on the day, with the Korean won leading the rise with a 0.4% rise.
Investors will also be watching U.S. jobless claims and comments from Fed officials expected later in the day.
Abhilash Koikala, head of foreign exchange and rates at Nuvama Professional Client Group, said the rupee depreciation could widen to Rs 83.70 on the negative surprise in US CPI.
Meanwhile, the rupee’s strength will remain around 83.20-83.30, Koykkara added.
(Reporting by Jaspreet Kalra; Editing by Sonia Cheema)
