Despite the gains on Wednesday, prices have pulled back from their highest level since April 2022, reached on Monday
FPI outflows, likely RBI dollar purchases weigh on domestic currency
The dollar drifted above multi-month lows on Tuesday, while the yen was perched near seven-month highs as investors held their breath for a potential policy shift at the Bank of Japan
The Fed's aggressive rate increases were a main driver of the dollar index's 8% surge last year
With the BOJ due to announce its monetary policy decision on Wednesday, expectations are for further tweaks to its yield control policy or a full abandonment of it
The dollar index, which measures the U.S. currency against six others, rose 0.059% to 102.220 but was languishing around its lowest level since June
The dollar hit $1.0845 against the euro, its weakest versus the common currency since April 25 following the CPI report
"You could start to see the normalisation of monetary policy which would be a huge step for Japan (and) a very positive tailwind for the yen," Turner added
The U.S. dollar was steady elsewhere, loitering just above a seven-month low on the euro at $1.0737 in the lead-up to U.S. inflation data due on Thursday
But Fed Chair Jerome Powell avoided speaking about rate hikes in a speech in Sweden on Tuesday
Fed fund futures now show investors believe the most likely outcome for the Fed's February meeting is for a 25-basis point increase
The euro was little changed on the day at $1.0521, and the dollar was up 0.25% against the Japanese yen at 133.70
The index was on track for a weekly gain of more than 1.8%, its largest since September
The dollar was last up 0.65% against the euro at $1.0536, and up 0.91% against the Japanese yen at 133.81
The dollar surged in 2022 as the Fed hiked interest rates aggressively, luring investors towards higher-yielding US assets
A series of separate reports showed business-sector activity across the euro zone held up better than expected in December, despite intense pressure from soaring energy prices
Brokerages expect upside on hedging demand amid global slowdown risk
The rupee was at 82.78 per dollar by 10:05 a.m. IST, having firmed up to 82.75. The currency closed at 82.8575 on Wednesday
The domestic currency has depreciated over 10% against the greenback so far this year
The domestic unit settled at 82.54 to the dollar on Monday, from 82.28 at previous close. So far in 2022, the Indian currency has shed 9.9% against the greenback