Indian Rupee loses its recent gains on the renewed USD demand.
The Dollar sales from banks, the decline in crude oil prices, and India’s robust growth outlook might limit the INR’s downside.
Investors will closely monitor the US March CPI inflation report and the FOMC Minutes on Wednesday.
Indian Rupee (INR) loses its recovery momentum on Wednesday amid the modest rebound of US Dollar (USD). The markets turn cautious ahead of the key US inflation data, as it is expected to show a high inflation reading. However, the foreign and state-run banks' USD sales, lower crude oil prices, and robust growth prospects in the Indian economy might provide some support to the INR and cap the upside of the USD/INR pair.
The release of the US March Consumer Price Index (CPI) report and the FOMC Minutes will be the highlights on Wednesday. These events could offer some hints about the inflation trajectory and the path of the Fed’s monetary policy. On the Indian front, the market will be closed on Thursday for Eid al-Fitr. The attention will shift to the Indian CPI inflation report for March and Industrial Production for February, due on Friday.
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