The rupee opened stronger on Friday on the back of weaker-than-expected US Consumer Price Index data. The domestic currency appreciated by 2 paise to open at 83.96 against the US dollar, compared to its previous close of 83.98 on Thursday, according to Bloomberg. The movement comes as the dollar index declined by 0.12%, settling at 102.8620, while Brent crude prices dipped 0.29% to $79.17 per barrel.
The latest US inflation data showed a rise in underlying inflation, with Core CPI advancing 0.3% in September for the second consecutive month. This pause in moderating price pressures, combined with last week’s rise in US jobless claims numbers, has fuelled debate over whether the Federal Reserve will pursue a small rate cut next month or pause after its large September reduction.
Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, expects the rupee to remain in a narrow range of 83.90 to 84.00 as the RBI continues to protect it from crossing the sentimental 84 mark.
India’s Economic Activity Eases, But Growth Projections Remain Stable
"The Indian CPI is expected to come in at 5.1% due to an unfavourable base effect,” Bhansali said. Foreign portfolio investors have been net sellers for the last nine sessions, totalling Rs 55,000 crore, which has fuelled daily dollar buying, he noted.
He also pointed to higher-than-expected US inflation growth at 2.4% versus an anticipated 2.3%, and a similar surprise in core CPI figures.
Despite this, the dollar index remained subdued at 102.92, and US 10-year yields dipped slightly to 4.065%. Brent oil prices continued to rise due to ongoing tensions in West Asia, especially after Israel's bombing of Lebanon.
Bhansali forecasted a rupee trading range of 83.85 to 84.05 for the day. He advised exporters to sell on upticks, as the RBI continues to protect the 83.99 level, and importers to buy on dips with a stop loss at 84.02 for unhedged imports.
Amit Pabari, managing director of CR Forex Advisors, noted the impact of rising oil prices, driven by Hurricane Milton, which has pushed crude to around $80 per barrel, further pressuring India’s trade deficit. However, Pabari sees a brighter outlook for the rupee, with substantial inflows expected to provide support in the near future.
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