Rupee trades below 82/USD for first time in more than a month

The rupee rose to 82.2225 to the dollar by 10:20 a.m. IST, up from 82.36 in the previous session. At 3 pm, the Indian currency was trading at ₹81.68 per USD.

Also Read: Indian rupee set for a directional breakout against US dollar: Analysts

A trader at a private sector bank conveyed expectation of further improvement in Indian currency.  A pick up in hedging activity from importers at current levels and probably all the way to 82, if we manage to reach there,said the trader.

He added that only the crossing of 82 mark can help the rupee in holding off more importers. The Indian currency is strengthening against the US dollars because of the later’s plummeting value since the US job report. 

Also Read: Outlook 2023: Here’s why rupee will depreciate against dollar in H1

The dollar index  has dropped almost 2% over the last two sessions on expectations that the Fed is likely to pause its rate hiking cycle after two 25 basis points hikes. Fed is expected to take the rate to 4.75-5%. The current implied peak, according to Fed futures, is 4.9%.

Two fed officials on Monday, expressed that the market pricing is moving as per their expectations.

Also Read: High CAD, Fed’s rate hike course likely to keep rupee under pressure in 2023

San Francisco Fed President Mary Daly said it was reasonable for rates to be at 5-5.25% and Atlanta Fed chief Raphael Bostic said he expects rates to rise above 5% and not much higher.

Dollar has continued to weaken amid hopes of a Fed pause more “entrenched”, said Srinivas Puni, managing director at QuantArt Market Solutions.

“If the (U.S.) CPI comes in lower than expected, we can expect this (downside) leg to extend and take USD/INR towards 81.50 or below,” Puni told Reuters.

Investors will be eyeing upon the US consumer price index data for December which will be released on Thursday. As per the Reuters poll, headline inflation rate is expected to drop to 6.5% from 7.1% in November.

(With inputs from Reuters)