The Indian rupee is predicted to open at approximately 81.84-81.88 against the U.S. dollar on Monday, as positive momentum from last week continues, supported by foreign equity inflows and speculative positions among traders.
This news comes alongside increasing chances that the Federal Reserve may raise its rates at the upcoming meeting in May, with odds now nearing 70%. Annual wage growth has slowed down but remains too high for compliance with the Fed's inflation target.
"The Indian rupee has been performing well over the past several weeks," says Ishaan Bhatt, a currency trader based in Mumbai. "Foreign investment in local equities has provided strong support for our currency."
On April 5th alone, foreign investors reportedly bought a net $100.1 million worth of Indian shares.
However, Asian currencies experienced some weakness on Monday following US payrolls data that strengthened arguments for further rate hikes by the Federal Reserve. The Chinese yuan and South Korean won both fell as a result of this development.
Economists polled by Reuters anticipate UK inflation data due Wednesday will reveal a 0.3% month-on-month increase in Consumer Price Index (CPI) and a rise of 0.4% in core CPI.
"UK inflation data will be an important factor leading up to any potential interest rate adjustments," explained London-based economist Dr Rebecca Thompson-Smithson.
Meanwhile, over the past week, foreign investors have been net buyers of local stocks valued around $226 million – which could help maintain upward pressure on India's currency if such trends persist.
U.S inflation data is also expected this Wednesday – an essential piece of information likely to influence decisions regarding future policies enacted by America's central bank system.