Rupee Back Under Pressure After US Data Helps Dollar Recover

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Rupee Back Under Pressure After US Data Helps Dollar Recover

The Indian rupee is expected to open lower on Thursday after U.S. retail sales fell less than expected, helping the dollar recover from a plunge fuelled by softer-than-expected inflation data. – Reuters.

The non deliverable forwards had indicated that the rupee would be opening around 83.20 the United States dollar in comparison to the previous close which was 83.1425.

The rupee had logged on Wednesday its best session in almost two months.

The dollar index had moved slowly up to 104.50, while the Asian currencies had dropped 0.2% to 0.6%, and the ten year US treasury was close to 4.50%.

Rupee is going to be “back on the defensive after yesterday’s mild reprieve,” and “we probably see 83.30 are thereabouts revisited,” a forex trader had said.

“The trade data was not particularly helpful (for the rupee),” he further added while referring to the merchandise trade deficit in India, which reached a recording high of $31.5 billion in October.

Retail sales in the United States had slipped by 0.1% MoM in October in comparison to the 0.3% drop which some economists had expected. Further, the data for September went through further revision to show the increase in sales to 0.9%, which was previously 0.7%.

The data refers to “decent resilience” and supports the view that the fourth quarter growth in GDP may be not as weak as the current predictions by the consensus.

The dollar had drawn additional support from the remarks by the officials of the Federal Reserve. San Francisco President of the Federal Reserve Mary Daly had warned against calling time on the rate rising cycle too early in an interview with the Financial Times. “Daly offered a glimpse into Fed policy thinking in 2024. She reminded markets that the Fed intends to keep rates very restrictive” for an elongated period before they could “normalize” them, as per a DBS research note.

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