Rupee to inch up on dollar dip to kick off US inflation data week

The Indian rupee is expected to open marginally higher on Monday on the back of the dollar's weakness versus its major peers in the lead-up to the U.S. inflation data.

Non-deliverable forwards indicate rupee will open at around 82.99-83.01 to the U.S. dollar compared with 83.0350 in the previous session. The dollar index was down at 103.99, while several Asian markets were off for a holiday.

The rupee is coming off a losing week in which it was in the 82.88-83.07 range.

"Last week's range of about 10 paisa on either side of 83.00 is more than likely until at least we know the U.S. inflation numbers," an FX trader at a bank said.

"Not that after the data the range will expand much, maybe just 20 paisa on either side."

Data due Tuesday is expected to show that U.S. consumer prices rose by 0.2 per cent month-on-month while the more important core measure increased 0.3 per cent.

The data comes after a robust U.S. jobs report and repeated pushback from Federal Reserve officials against imminent rate cuts. Both of these have prompted a significant cool-off in expectations around a rate cut at the March meeting.

The U.S. Labor Department on Friday published the annual consumer price index revisions. The December headline inflation rate was revised down and there were slight upward revisions to both the November and October prints.

"The revisions do not alter the pace of disinflation and are therefore unlikely to change the Fed’s views," ANZ said in a note.

"Given the majority of Fed members have asked for further evidence of progress on inflation before cutting rates, upcoming inflation prints will be key."

Meanwhile, India's December inflation data is due later in the day and is expected to show retail inflation rose by 5.09 per cent, the slowest pace in three months.