USDINR is expected to open flat around 83.30 due to cautious sentiment in global markets after U.S yields hit five-months high. Yesterday US Q1 GDP missed forecasts, while a monthly inflation indicator rose to 3.7%, suggesting a potential delay in Fed rate cuts. The technical setup for USDINR is rangebound, awaiting the release of the U.S. core PCE number later in the evening. Day range is expected between 83.20 to 83.40.

Last week, the Indian rupee dropped to a record low of 83.57 against the U.S. dollar due to worries about conflict in the Middle East. This has affected other emerging market currencies too.

This week, the U.S. will release a key measure of inflation that the Federal Reserve uses. This will give clues about future interest rate changes. The Fed’s recent statements have made investors less hopeful about interest rate cuts. We can expect the rupee to trade between 83.25 and 83.60 this week against dollar.

The central bank stepped in last week to help prevent bigger losses, and they might do more depending on what happens in the Middle East and with interest rates.

The Indian rupee reached a historic low of 83.40 against the dollar due to high demand for dollars at financial year-end. However, the RBI intervened to prevent further decline, stabilizing it at a new low of 83.45. Despite this, the rupee fell by 1.5% in the fiscal year ending March 31, which was a better performance compared to other Asian currencies. During this period, the dollar index rose to 104.7, up 3.2% for the quarter, while many Asian currencies weakened.

In April, two crucial factors will drive changes in the rupee’s value: decisions made by the Reserve Bank of India (RBI) regarding its policies and data related to the US Consumer Price Index (CPI). During its latest meeting, the RBI’s monetary policy committee chose to keep the key repo rate steady at 6.5%, marking the seventh consecutive meeting with no changes. The rationale behind this decision was the country’s strong economic growth, although inflation has remained persistently above the 4% target set by the RBI. The RBI Governor emphasized the necessity for an actively disinflationary monetary policy to tackle this inflationary pressure. This strategic approach also played a role in lending some support to the rupee’s value during this period.

Globally, the US CPI will also impact the rupee’s movement. Markets are currently pricing in a 49.1% chance of an interest rate cut from the Fed in June, with July expected to mark the beginning of the easing cycle. Market participants are anticipating 62 basis points of cuts this year, slightly lower than the Fed’s projection of 75 basis points. The US consumer price index (CPI) is expected to show core inflation slowing to 3.7% in March from 3.8% the previous month. Any unexpected increase could limit potential gains in the rupee. A monthly expected range for the USDINR pair is between 82.90 to 83.50 in April.