India’s Rupee Premiums Decline as Directionless Rupee Awaits US Inflation Data

The Indian rupee remains unchanged on Tuesday, while forward premiums decreased in anticipation of the highly-awaited US inflation data. Currently, the rupee is quoted at 82.4250 to the dollar, which is almost at the same level as the previous trading session’s 82.43. The upcoming US data is expected to show an increase in the month-on-month US core inflation rate by 0.4%, which is well above the rate required to bring back inflation to the Federal Reserve’s target. Any significant deviation from the consensus could lead to significant market movements. The Federal Reserve’s decision on interest rates is scheduled for Wednesday, and experts predict a pause in the interest rate decision. Nonetheless, there is still a 25% chance of a rate hike. The S&P 500 index grew by 1% overnight, while US yields were slightly lower, and the dollar index dropped to 103.44. Rupee forward premiums declined, and the 1-year implied yield fell to 1.72% on the back of the recent reading on the Indian consumer inflation print.