Rupee gains on dollar’s dip, but nears resistance zone

Rupee gains on dollar’s dip, but nears resistance zone

The Indian rupee rose on Wednesday as the dollar slipped ahead of the U.S. inflation data, with the local currency nearing a zone, that traders said, it may find difficult to overcome. The rupee was at 82.29 to the U.S. dollar, up from 82.3650 in the previous session. The rupee has been on a recovery path due to the dollar’s decline since the U.S. non-farm payrolls data on Friday.

It is “difficult to see” the USD/INR moving below 82.20-82.30, the resistance-turned-support area, a forex trader said, adding short-term speculators and importers are likely to step in. The dollar index extended losses in Asian trading hours, slipping to a two-month-low of 101.38. That lifted Asian currencies between 0.1% and 0.3%.

“If the consensus is correct about headline and core inflation rising by 0.3% month-on-month, the Fed will not be convinced that inflation can return to its 2% target this year,” DBS Research said in a note. India’s June inflation data, due about half an hour before the U.S. data, is expected to have risen 4.58% on-year from 4.25% in May, according to a Reuters poll. The rupee forward premiums were mostly unchanged before the U.S. and India data. The 1-year implied yield was at 1.64%.