MUMBAI, Feb 23 (Reuters) – The Indian rupee inched lower on Friday due to dollar demand from importers and oil companies, but clocked weekly gains on the back of foreign fund inflows into the share and bond markets.
The rupee ended at 82.9375 per U.S. dollar compared with its close of 82.84 in the previous session.
On the week, the rupee rose 0.1%. The unit had risen to a three-week high of 82.8350 on Thursday. Traders said that the rupee was unable to break past the key resistance level of 82.80 this week, despite inflows, amid likely intervention from the Reserve Bank of India (RBI).
“We don’t expect the rupee to rise sharply above 82.70-82.80 levels as the RBI may attempt to intervene and buy dollars,” Jigar Trivedi, senior research analyst – currencies and commodities at Reliance Securities, said.
The Federal Reserve’s “wariness” over cutting interest rates early will also keep the rupee under some pressure, he said.
Fed Governor Christopher Waller said on Thursday that policymakers should delay interest rate cuts by at least another couple more months to see if a recent uptick in inflation signals stalling progress toward price stability or is just a bump in the road.
Minutes of the Fed’s last policy meeting indicated that the U.S. central bank needed to be sure that inflationary risks receded before cutting rates.
A March U.S. rate cut has now been fully priced out while odds of a reduction in May are less than 25%.
Investors await January headline and core PCE index from the U.S. next week for fresh cues on the timing of interest rate cuts.
The data will draw extra scrutiny following the higher-than-expected U.S. consumer inflation reading.
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Reporting by Siddhi Nayak; Editing by Mrigank Dhaniwala
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