The Indian rupee slipped against the dollar on Tuesday, mirroring the fall in Asian currencies ahead of the U.S. inflation report, while importer-led demand for the greenback weighed.
The partially convertible rupee ended at 82.8050 per dollar, against its previous close of 82.53.
Dollar demand by domestic players continued, with importers of oil and other commodities “bidding heavily” for the U.S. currency, a foreign exchange trader said.
Asian currencies were weaker against a steady dollar index ahead of the November U.S. consumer prices report. Any positive surprise there could influence the Federal Reserve’s monetary policy decision due on Wednesday.
For now, markets are largely expecting inflation to ease slightly and for the Fed to hike rates by 50 basis points (bps).
“We could see the dollar bouncing on any upside surprise in today’s CPI data, including upward revisions to last month’s reading,” ING analysts wrote, but with a caveat that the moves could be curtailed due to the looming Fed meet.
In India, headline inflation came in at a much lower than expected 5.88% in November led by lower food prices and vegetables, data showed on Monday.