By Siddhi Nayak
MUMBAI (Reuters) – The Indian rupee recouped early losses to end higher for a sixth consecutive session on likely foreign inflows.
The rupee settled at 83.0350 against the U.S. dollar, its highest closing level since Dec. 15, against its close of 83.1150 in the previous session.
The local unit opened lower and hit an intraday low of 83.18 earlier in the day, before rising to an over three-week high of 82.98 in the session.
This was due to dollar selling by a large UK-based bank, according to three traders. These were likely external commercial borrowing inflows, they said.
“Dollar inflows have kept the rupee the top performer among Asian currencies,” Dilip Parmar, a foreign exchange research analyst at HDFC Securities, said.
“We will have to see if the move is sustainable given considering how the RBI (Reserve Bank of India) has absorbed such inflows in the past.”
Asian currencies were mostly lower tracking the dollar index’s rise to 102.60.
U.S. consumer inflation data is due on Thursday and economists polled by Reuters expect core CPI to rise 0.3% month-on-month in December. On an on-year basis, core CPI is expected to rise by 3.8%, slower than the 4% pace in November.
A report that is in line with expectations would mean progress towards the Federal Reserve’s 2% inflation target, making investors more confident that a series of rate cuts are on the way this year.
The U.S. inflation data will indicate how well-placed the current interest rate expectations are.
Investors see a high probability of rate cuts kicking off at the March meeting.
Markets are currently pricing in a nearly 66% chance that the Fed could begin easing rates in March, the CME FedWatch Tool showed.
(Reporting by Siddhi Nayak; Editing by Mrigank Dhaniwala)
