MUMBAI, Jan 12 (Reuters) – The Indian rupee was trading higher on Friday, surpassing the 83-level against the U.S. dollar, as traders capitalised on the opening decline to build bullish bets on the local currency.
The rupee was at 82.9775 to the dollar at 11:22 a.m. IST, up from 83.0275 in the previous session. The currency had opened at 83.08.
“The view has changed. It is now a sell on rally rather than a buy on dips (on USD/INR),” a foreign exchange trader at a bank said.
“The opening up move ran into a host of offers and now we are back below 83. Now the question is if we can sustain here, which then will open dollars for a larger move.”
The rupee on Wednesday and Thursday failed to stay above the 83 level.
ASIAN PEERS RANGEBOUND
Most Asian currencies were rangebound after bets of aggressive Federal Reserve rate cuts remained intact despite the higher-than-expected U.S. inflation data.
Headline U.S. Consumer Price Index (CPI) rose 3.4% from the previous year in December, compared to forecasts of a 3.2% increase. On a monthly basis, CPI rose 0.3% as opposed to expectations of a 0.2% increase. Core CPI rose 3.9% year-on-year, against 3.8% expected.
The U.S. yields and the dollar index rose following the data. However, the moves faded as the New York Session progressed.
The data did not offer any fresh signals for Fed officials. Policymakers are currently looking to gauge whether inflation is likely to return to 2% target and when to cut policy rates. In December, Fed officials forecast three rate cuts in 2024.
Investors have priced in six rate cuts.
The real test for investors will come with the US PCE deflator on Jan. 26, DBS Research said in a note.
