The Indian rupee opened marginally higher against the US dollar Thursday sustained inflows into the domestic market and a weaker greenback.
The local unit opened 4 paise higher at 81.95 against the US dollar as compared to Wednesday’s close of 81.99.
The American currency dropped against its major peers, US yields dropped and US equities rose after the US consumer inflation rate rose by 4.9%, the lowest in two years and marking the tenth straight month of decline.
The month-on-month and the year-on-year core inflation rate rose 0.4% and 5.5%, matching expectations.
“The US dollar index fell by 0.20% on Wednesday as the US CPI dropped below the expected 5% mark for the first time since June 2021. The drop in the April CPI to 4.9% knocked the Treasury yields lower and raised the bets that Fed would cut the rates in this year,” ICICI Direct said in a note.
“USD/INR is likely to face the hurdle near 82.15 and decline towards the 81.80 as the probability of rate cut towards the second half of the year has increased. US$INR could face the resistance of 50 day EMA at 82.15 and slide towards the immediate support at 81.80. A move below 81.80 would weaken further towards 81.60,” it added.
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Meanwhile, Brent crude oil futures gained by 0.80% to $77.02 per barrel, while the WTI crude increased 0.80% to $73.14.
On Wednesday, the local currency gained 7 paise to close at 81.99 against the US dollar as investors remained on the sidelines ahead of the US inflation data.
Moreover, sustained foreign fund inflows into Indian equities and easing crude oil prices lent support to the rupee.
Foreign Institutional Investors (FIIs) net bought Indian shares worth ₹1,833.13 crore, while Domestic Institutional Investors (DIIs) net sold Indian equities worth ₹789.67 crore on May 10.
(With inputs from Reuters)
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