Indian rupee inches up against UAE dirham but may tiptoe in tight range

The Fed is expected to keep rates unchanged on Wednesday; however, investors will be keeping an eye on its projections and commentary for cues on the future policy rates

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Reuters file photo

By Reuters

Published: Tue 12 Dec 2023, 10:26 AM

Last updated: Tue 12 Dec 2023, 10:33 AM

The Indian rupee edged higher on Tuesday, with traders anticipating a narrow trading range as they await a closely watched US inflation report and the outcome of the Federal Reserve meeting.

The South Asian currency was at 83.3650 against the US dollar (22.72 against UAE dirham) at 8.45am, UAE time, up 0.03 per cent from its previous closing at 83.3925.

[Editor's Note: For real-time forex rates, click on the widget below or visit KT's dedicated Trading News page here.]

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The dollar index was little changed at 103.97, while most Asian currencies retreated, with the Thai baht leading losses, down by 0.8 per cent.

"The rupee seems locked in a remarkably narrow trading range, requiring significant events or substantial flows to prompt a reversal," said Amit Pabari, managing director at foreign exchange advisory firm CR Forex.

The currency has oscillated between 83.2475 and 83.40 so far in December. The Reserve Bank of India has intervened multiple times to limit the rupee's losses near 83.40, traders said.

"Not expecting much action today (on the rupee)," ahead of the US inflation data and the Fed's policy outcome, a forex trader at a private bank said.

Consumer inflation data in the US, due on Tuesday, is expected to show that core CPI rose to 0.3 per cent month-on-month in November, up from 0.2 per cent in October, according to a Reuters poll.

Meanwhile, the Fed is expected to keep rates unchanged on Wednesday. However, investors will be keeping an eye on the Fed's projections and commentary for cues on the future policy rates.

Fed futures are currently pricing in about 125 bps of rate cuts through 2024, according to CME Group's FedWatch tool.

India will also report retail inflation data on Tuesday with expectations that year-on-year CPI rose to 5.7 per cent in November, up from 4.87 per cent in October, according to a Reuters poll.

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Reuters

Published: Tue 12 Dec 2023, 10:26 AM

Last updated: Tue 12 Dec 2023, 10:33 AM

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