The Indian rupee began the trading session on Tuesday, June 13, 2023, with a flat opening at 82.43 against the US dollar. While it initially showed a positive trend, tracking gains in regional currencies and a weaker US dollar, concerns over rising inflation and potential monetary tightening by the US Federal Reserve limited its gains.
Gains in Regional Currencies:
The rupee’s opening was influenced by the positive performance of regional currencies, including the Indonesian rupiah and the Malaysian ringgit. These currencies experienced gains due to expectations of further monetary easing by their respective central banks. This positive sentiment spilled over to support the rupee’s initial trading performance.
Softer US Dollar:
The US dollar exhibited weakness against major currencies on Tuesday. Investors awaited the release of crucial US economic data, such as the producer price index and retail sales figures. This cautious stance towards the US dollar contributed to the rupee’s positive opening against the greenback.
Concerns over Rising Inflation:
The rupee’s gains were limited by concerns over rising inflation in India. Recent government data revealed that inflation in the country reached a 7-month high of 7.04% in May. This elevated inflation rate puts pressure on the Reserve Bank of India (RBI) to consider further interest rate hikes to control inflation, thereby impacting the rupee’s performance.
Expected Trading Range:
Analysts predict that the rupee will trade within a range of 82.20 to 82.60 against the US dollar on Tuesday. However, this outlook remains subject to various factors that could influence the rupee’s movement throughout the day. Key determinants include the performance of the US dollar, crude oil prices, and the outcome of the RBI’s upcoming monetary policy review scheduled for Wednesday.
Conclusion:
The Indian rupee opened on a positive note against the US dollar, buoyed by gains in regional currencies and a weaker greenback. However, concerns over rising inflation and the potential monetary tightening by the US Federal Reserve curtailed the rupee’s gains. Traders and investors will closely monitor the performance of the rupee, keeping an eye on economic data releases and the RBI’s monetary policy decisions in the coming days.
