The Indian rupee opened marginally lower against the US dollar on Wednesday amid a stronger greenback and a surge in crude oil prices. The local currency opened at 82.93 a dollar as compared to previous close of 82.92.
The US dollar index was barely changed at 104.60, while Asian currencies and equities were mixed. Treasury yields climbed higher on Wednesday, with the two-year note touching 5.0264%, while ten-year yields held at 4.2881%.
While rising crude oil prices pressurized the rupee, easing domestic inflation supported the local currency at lower levels.
Crude oil prices traded higher, hovering around 10-month high, as expectations of tighter global supply and fears of supply disruption in Libya outweighed concerns of slower demand in some countries such as China, Reuters reported.
Brent futures rose 0.1% to $92.14 a barrel, while US West Texas Intermediate (WTI) crude gained 0.2% to $88.98 a barrel.
Meanwhile, India’s retail inflation eased in August, but remained above the upper end of the central bank’s target band for a second consecutive month. The CPI inflation in August fell to 6.83% from 7.44% in July.
The Index of Industrial Production (IIP) rose by 5.7% in July, according to the official data.
“The pair is expected to face the hurdle near 83.10 and move back towards 82.80 amid strong factory output data. The Factory output grew to five month high of 5.7% in July. Meanwhile, sticky inflation numbers, which is still above RBI’s higher band of 6% could force the RBI to keep its liquidity conditions tight. Now the investors will eye on today’s key US CPI numbers, which could provide more clues to the future rate path,” ICICI Direct said.
It expects USDINR to consolidate in the range of 82.80-83.10.
Investors will now focus on the key US inflation data to be announced on Wednesday for clues on the US Federal Reserve’s policy outlook.
On the domestic front, the Indian stock market indices, Sensex and Nifty were trading lower in the pre-opening session.
On Tuesday, the Foreign institutional investors (FIIs) net sold Indian shares worth ₹1,047.19 crore, while Domestic Institutional Investors (DIIs) net purchased shares to the tune of ₹259.48 crore, as per provisional data available on the exchanges.
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Updated: 13 Sep 2023, 09:24 AM IST