By Gaurang Somaiya
Rupee continued to trade in a range and market participants were on the side-lines even after the release of CPI numbers from the US as well as on the domestic front. The dollar strengthened post the release of the US inflation number that was reported higher-than-expectation. On the domestic front, data showed inflation in August eased to 6.83% as compared to 7.44% in the previous month following ease-off in vegetable prices and some moderation in the prints for clothing and footwear, housing and miscellaneous items. Core inflation has come at 4.9%, in line with expectations. In his recent comments, the RBI Governor also said that the central bank expects inflation to moderate from September onwards. On the other hand, industrial output grew 5.7% in July as compared to 3.8% in the previous month. Weakness for the rupee at the end of the week following release of trade balance number. Data showed the trade deficit widened to the highest level in 10-months to $24.2 in August as compared to $20.7 billion in the previous month.
This week, on the domestic front, no major economic data is expected to be released but it will be global factors that will influence the market. From the US, market participants will be keeping an eye on the Fed policy statement; expectation is that the central bank could keep rates unchanged but it will be the comments of Fed governor that will be guiding the market. Apart from Fed, focus will also be on the Bank of England policy statement that could trigger volatility in case of the pound. For the week, we expect the USDINR(Spot) to trade with a positive bias and quote in the range of 82.70 and 83.50.
(Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services. Views expressed are the author’s own. Please consult your financial advisor before investing.)
