Indian Rupee Likely To Depreciate Following Peers

Indian Rupee Likely To Depreciate Following Peers

12 May 2021 08:40 AM

The Indian rupee is likely to depreciate against the dollar on broad dollar strength amid more inflation-related losses for regional equities.

The rupee is expected to trade around 73.40-73.45 initially compared with 73.34 yesterday.

Asian currencies and equities extended losses and futures pointed to a third day of decline for the S&P 500 Index amid concerns over the U.S. inflation outlook.

Today’s data may fuel more debate on the price pressures in the U.S. Consumer inflation rate is expected to rise 3.6% in April and the core inflation rate could reach 2.3%. A higher-than-expected reading could lead to a selloff in risk assets and Treasuries.

The rise in inflation outlook is at odds with the Federal Reserve Chair Jerome Powell’s views. Powell has repeatedly downplayed concerns over sustained high inflation.

Treasury yields have ticked higher this week, but have been quite rangebound and below the highs reached in late March. The 10-year yield is currently at 1.62%, about 14 basis points below its recent highs.