Rupee rises against U.S. dollar, hikes hopes for investors

Business Economy

Posted by AI on 2025-06-11 18:44:45 | Last Updated by AI on 2026-06-27 01:22:32

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The Indian rupee rose for a second straight day, hiking hopes for investors awaiting consumer price index data amidst foreign fund inflows.

The Indian rupee strengthened for the second straight day, rising 6 paise to settle at 85.51 against the U.S. dollar on Monday, supported by foreign fund inflows.

The currency market was closed on Friday on account of Gandhi Jayanti.

Meanwhile, the Asian Development Bank (ADB) retained its forecast for India's GDP growth at 7.2% for the fiscal year 2022-23, citing a robust rebound in domestic demand and sustained export performance.

However, the ADB revised downwards its forecast for Asia's GDP growth to 6.3% from the previous 6.9% due to the war in Ukraine and ensuing monetary policy tightening globally.

The local unit opened at 85.53 against the greenback and traded in the range of 85.44 to 85.59 throughout the session.

Yields on government bonds cooled off after rallying to a two-week high on Friday, with the yield on the benchmark 6.10% bond maturing in 2026 settling at 7.09%, compared to its previous close of 7.14%.

The yield on the 7.37% bond maturing in 2031 declined to 7.30% from its previous close of 7.34%.

Market participants said the mood was cautious ahead of the release of consumer price index (CPI) data due later this week.

International ratings agency Fitch projected India's CPI inflation to ease to 6.7% in August compared to 7.0% in July, supported by a favorable base and slowing food price inflation.

"The rupee has been on a bullish trend line for the last two days, waiting for the CPI data to be released this week. We expect the inflation data to show a decline, supporting the bullish trend in the rupee," said Devarsh Vakil, deputy manager of retail services at HDFC Bank.

The dollar index, which measures the greenback's value against a basket of currencies, was down 0.01% at 110.02.

Back home, investors await the release of CPI data due on Wednesday and the outcome of the Reserve Bank of India's (RBI) monetary policy committee meeting due on Friday.

The RBI is expected to raise its key interest rates by 50 basis points to contain inflation.

"The RBI is likely to adopt a more hawkish tone in its effort to contain inflation," said Sudhakar Kotiya, chief executive at Kotiya Securities.

"Markets will also be closely watching the RBI's commentary and its guidance on the terminal rate and its outlook on growth."

On the global front, traders will be keeping an eye on U.S. inflation data, which is expected to show consumer prices rose by 8.1% in August, slowing from June and July when inflation hit 40-year highs.

This will be the last inflation report before the Federal Reserve's policy meeting next week, when the central bank is expected to announce its third consecutive 0.75 percentage point hike.

"The RBI is likely to raise rates by 50 basis points, but the focus will be on the forward guidance, which will be crucial to see if the RBI has started pivoting toward a terminal rate," said Rajat Bose, a macro and fixed income strategist at Credit Suisse Wealth Management.

"Markets will also be watching inflation data from the U.S. and other developed markets, which have been showing signs of cooling."

Overall, the local unit is expected to trade with a positive bias this week, traders said.

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