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    Rupee little changed after three-day rally on inflation jitters

    Synopsis

    The rupee finished the session at 81.55 per dollar to recoup mild losses, versus its previous close of 81.5750. The currency had gained 1.40% over the past three sessions after four weeks of range-bound movement.

    Rupee little changed after three-day rally on inflation jittersReuters
    The Indian rupee ended little changed after three days of gains on Thursday, as investors awaited monthly inflation data due after market hours at home as well as in the United States.

    The rupee finished the session at 81.55 per dollar to recoup mild losses, versus its previous close of 81.5750. The currency had gained 1.40% over the past three sessions after four weeks of range-bound movement.

    "Markets are in a wait-and-watch mode with U.S. inflation due later in the day," said Jigar Trivedi, senior research analyst, currencies and commodities at Reliance Securities.

    Everything is at a "crucial juncture" as this print could determine the U.S. Federal Reserve's policy path and whether the dollar index will rebound, he added.

    The dollar index slipped under 103 levels in range-bound trading.

    With markets expecting a third consecutive month of cooldown in the print, hopes have built that the Fed could hike rates at a slower pace and even cut towards the end of this year.

    Currently, Fed futures pricing shows a near-75% probability of a 25 basis point-hike next month.

    Meanwhile, India's retail inflation likely held steady at 5.90% in December from a year earlier, staying within the Reserve Bank of India's comfort zone for a second month, a Reuters poll found.

    Moderation in food price rise is likely to be offset by elevated core inflation, which will potentially remain sticky in the coming months, the poll added.

    That could give impetus to the country's central bank to remain on a hawkish path as well.

    However, the shrinking interest rate differential between U.S. and India, which has weighed on forward rupee premiums, will make it difficult for the currency to rise much above current levels against the dollar, two bankers told Reuters.



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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