USD/INR: Rupee Edges Higher to 86.66 Ahead of US Inflation Data

The Indian rupee traded at 86.65 to the US dollar on January 15, 2025, showing signs of marginal recovery in the interbank spot market after hitting an all-time low of 86.6475 during the previous session. The rupee saw an intra-day high of 86.665, signalling cautious optimism ahead of critical US inflation data.

Indian Rupee Performance

Yesterday on January 14, 2025, the rupee stood at 86.58, marking a 60 paisa decline to 86.6953 in the interbank spot market. The currency is down 1.2% this month, reflecting persistent pressure amid global uncertainties. The 1-month non-deliverable forward suggests the rupee is likely to open between 86.58 and 86.60 to the dollar on Wednesday, compared to the previous close of 86.63.

Dollar Retreats, Oil Prices Decline

The US dollar index eased to 109.24, retreating nearly 1% from its multi-year high reached two days ago. Meanwhile, oil prices have also pulled back, with Brent crude falling below the $80 per barrel mark. These developments have provided some relief to emerging market currencies, including the rupee.

Market Waits for U.S. Inflation Data

Market participants are closely watching the release of US inflation data, which is expected to shape the Federal Reserve’s monetary policy trajectory. According to a Reuters poll, the US headline consumer price index (CPI) is anticipated to have risen by 0.3% month-on-month and 3% year-on-year in December. The core inflation gauge is projected to increase by 0.2% month-on-month.

The inflation data follows a robust US jobs report that has led traders to scale back expectations of Federal Reserve rate cuts this year. Rate futures now indicate only one rate cut for 2025, compared to the Fed’s projection of two rate cuts last month.

WTI and Brent Show Mixed Movement

West Texas Intermediate (WTI) crude rose toward $78 a barrel on Wednesday, January 15, 2025, after a 1.7% drop the previous day, triggered by reports of a potential ceasefire between Israel and Hamas.

Brent crude, meanwhile, slipped below the $80 mark. The American Petroleum Institute reported a 2.6 million barrel decline in US crude inventories last week, marking what could be the eighth consecutive weekly drop if confirmed by government data expected later on Wednesday.

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