The Indian rupee opened at 83.3690 to the US dollar on Wednesday, (around Dh22.716), slightly changed from the previous closing of 83.4150 (around Dh22.728).
The rupee gained on Tuesday, boosted by dollar sales from state-run banks, likely on behalf of merchant clients. Traders expected the domestic currency’s gains to be limited as importers may step in to cover hedging requirements.
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Asian shares
Asian shares rose to a one-month high on Wednesday, buoyed by a rally in tech stocks, while the dollar was steady as soft U.S. retail sales data reinforced expectations of the Federal Reserve cutting rates later this year.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 1 per cent higher and on track for a more than 4 per cent gain in June.
The tech stocks in the region rose over 2 per cent to a record high as the rally raged on with AI darling Nvidia dethroning Microsoft to become the world’s most valuable company on Tuesday.
Inflation readings
US markets are closed on Wednesday, which will likely result in muted trading throughout the day.
US retail sales barely rose in May and figures for the prior month were revised considerably lower, data showed on Tuesday, suggesting economic activity remained lacklustre in the second quarter.
Last week, mild US inflation readings contrasted with an overall hawkish stance by Fed officials, who trimmed their previous median projection for three quarter-point rate cuts this year to one.
“Rate cuts are a stronger story for 2025 but that’s fine because there is hope that it will happen in a bigger way over the next two years even if 2024 remains uncertain, and that will keep markets supported,” Menon said.
Fed officials are looking for further confirmation that inflation is cooling and for any warning signs from a still-strong labour market as they steer cautiously toward what most expect to be a rate cut or two by the end of this year.
In Asia, the Japanese yen was little changed at 157.835 per dollar, hovering close to the six-week low of 158.255 it touched last week. The currency remains under pressure from the wide difference between interest rates in Japan and the United States.