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Indian rupee closes little changed ahead of key US CPI data

1 week ago 30

The Indian rupee sidestepped gains in its broader Asian peers to end barely changed on Wednesday, as traders awaited the U.S. consumer inflation data for cues on when the Federal Reserve may kick off rate cuts.

The rupee closed at 83.50 against the U.S. dollar, compared to its previous close of 83.51.

The dollar index slipped 0.2% to 104.8. Most Asian currencies rose, with the Philippine peso up 0.6% and leading gains. The offshore Chinese yuan strengthened 0.2% as well.

While the rupee had inched up early in the session on dollar sales from foreign banks, they were later seen bidding for dollars which weighed on the currency, traders said.

Traders pointed to mild dollar sales from state-run banks, likely on behalf of the Reserve Bank of India, which helped offset pressure from dollar demand by foreign banks and importers.

Outflows from Indian equities amid nervousness about the upcoming outcome of the national election have kept the rupee under pressure over recent trading sessions.

Overseas investors have pulled out $3 billion from Indian equities in May so far.

Meanwhile, India's merchandise trade deficit increased to $19.1 billion in April from $15.60 billion in March, data released on Wednesday showed.

Investors await the closely-watched U.S. consumer price index data for April later in the day, alongside retail sales data for the same month and remarks from Fed policymakers.

Economists polled by Reuters estimate core CPI rose 0.3% month-on-month in April, down from 0.4% in March.

"A softer than expected U.S. CPI reading may lead to some appreciation in the rupee but gains will likely be limited near 83.35-83.40," said Anindya Banerjee, head of foreign exchange research at Kotak Securities.

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