Currency Market Analysis May 17,2023: Rupee Remain Range Bound

May 17, 2023

New Delhi, India

Daily Currency Market Analysis

USDINR

• Trading Range: 83.48-83.58
• Closing Price: 83.50
• The rupee remained in a tight range as traders awaited U.S. consumer inflation data for cues on when the Federal Reserve may begin rate cuts. The U.S. annual inflation rate in April inched lower to 3.4% from a 6-month high of 3.5% in March. Meanwhile, India’s merchandise trade deficit increased to $19.1 billion in April from $15.6 billion in March​.

EURINR

• Trading Range: 90.14-90.52
• Closing Price: 90.30
• The euro gained as investors adjusted expectations for interest rate cuts by major central banks. Easing eurozone inflation has created room for potential rate cuts, as highlighted by ECB’s Knot. Additionally, the ZEW Indicator of Economic Sentiment for the Euro Area rose to 47 in May, the highest since February 2022​​.

GBPINR

• Trading Range: 104.68-105.54
• Closing Price: 105.10
• The British pound strengthened, driven by a weakened dollar after Federal Reserve Chair Jerome Powell reassured that no rate hikes are imminent. BoE Chief Economist Huw Pill hinted at possible rate cuts over the summer, bolstering confidence. Governor Bailey also suggested future rate cuts, with traders now seeing a higher likelihood of a cut in June and a predicted 25 basis points reduction in August​.

JPYINR

• Trading Range: 53.26-53.86
• Closing Price: 53.60
• The yen weakened amid concerns that Japanese authorities might intervene again to support the currency. Japan’s Finance Minister Suzuki stated that the government is coordinating with the Bank of Japan to ensure aligned policy objectives regarding foreign exchange. Producer prices in Japan increased by 0.9% year-on-year in April, remaining steady for the second consecutive month.