INDIAN RUPEE EDGES HIGHER AHEAD OF US PCE DATA

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  • The Indian Rupee recovers some lost ground in Friday’s Asian session. 
  • The renewed US Dollar demand and India’s foreign outflows might undermine the INR. 
  • US PCE data for June will be in the spotlight on Friday.

The Indian Rupee (INR) posts modest gains on Friday on the weaker Greenback. The month-end US Dollar (USD) demand and India’s foreign outflows drag the INR lower to an all-time low on Thursday. Forex traders said foreign fund outflows from Indian equities following the government’s decision to raise capital gains tax from equity investments and equity derivative trades might weigh on the local currency in the near term. 

However, the potential intervention from the Reserve Bank of India (RBI) might cap the INR’s downside, with support from record-high foreign exchange reserves. Investors will closely monitor the US Personal Consumption Expenditures (PCE) Price Index data for June on Friday. The headline PCE is expected to show an increase of 0.1% MoM in June, while the Fed’s preferred measure of inflation, the Core PCE, is expected to ease to 2.5% YoY in June from 2.6%. The softer PCE inflation data could pave the way for the Fed to lower its key interest rate as soon as September and might weaken the USD. 


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