Indian Rupee extends gains after WPI; ends 6 paise higher at 88.22/$

Indian Rupee today: The domestic currency closed 6 paise higher at 88.22 against the greenback on Monday

The Indian Rupee extended its morning gains to end higher on Monday after the Wholesale Price Index inflation rose to 0.52 per cent in August. 

 

The domestic currency closed 6 paise higher at 88.22 against the greenback on Monday, according to Bloomberg. So far this year, the rupee has depreciated 3.04 per cent, making it the worst performer among Asian peers. 

Technical market updates indicate some profit-taking on longs at higher levels, with an expected range of 88.14 to 88.30 for the day, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.  "There were some inflows on account of the IPOs, while demand was lower after a constant upside seen in the last week, leading the rupee to fall to 88.46 with RBI selling dollars to ensure the fall is contained." The outlook for the currency remains mixed with some positive momentum indicators and a cautious near-term forecast, Bhansali said. 

 

Attention now turns to the US Federal Reserve’s September 17 policy decision, with expectations of a rate cut creating uncertainty over the dollar's trajectory. The Fed is scheduled to hold its next FOMC meeting on Sept. 16-17, with the Bank of Canada, the Bank of England, and the Bank of Japan also set to announce policy decisions this week.

 

The Wholesale Price Index (WPI)-linked inflation rose to 0.52 per cent in August, from -0.58 per cent in July, according to the data released by the Ministry of Commerce and Industry on Monday. The positive rate of inflation in August was due to an increase in prices of food products, manufacturing, non-food articles, non-metallic mineral products and transport equipment.

 

Despite the recent pressure, analysts at YES Securities see limited downside in the domestic currency from current levels. "Indian rupee's slide past the 88-mark largely reflects US tariff-driven sentiment rather than a deterioration in India’s underlying fundamentals, suggesting limited room for further depreciation," the brokerage said in a recent report. 

 

The dollar index traded pared gains amid increased expectations of a Fed rate cut this week after the consumer inflation print and weak labour market. The dollar index, a measure of the greenback against a basket of six major currencies, was down 0.07 per cent at 97.47. 

 

In commodities, crude oil prices traded higher amid escalating supply risks emanating from recent drone attacks on Russian refineries by Ukraine. Brent crude price was up 0.46 per cent at 67.30 per barrel, while WTI crude prices were higher by 0.61 per cent at 63.07 per barrel, as of 3:35 PM IST.