USD/INR Holds Ahead of FOMC

India’s rupee held near its highest level since November before the start of the U.S. Federal Reserve’s two-day policy meeting today.

Some 45 percent of 53 economists in a Bloomberg News survey forecast the central bank will raise the benchmark lending rate in June. Six percent said July, while 30 percent said the Fed will wait until September for the first increase since 2006. Fed officials last month said they expect to lift the rate this year. Indian government bonds were steady today.

The rupee was little changed from Jan. 23 at 61.4125 a dollar in Mumbai, prices from local banks compiled by Bloomberg show. The currency, which has climbed 2.7 percent this year in Asia’s best performance, reached 61.3675 on Jan. 23, the highest level since Nov. 5.

“Investors are a bit cautious ahead of the Fed meeting,” said Arnab Sardar, a currency trader at Dhanlaxmi Bank Ltd. in Mumbai. “Even though things are progressing well on India’s domestic front, there’s concern that there may be some outflows when the U.S. starts raising rates.”

Three-month offshore non-deliverable forwards fell 0.1 percent to 62.22 rupees a dollar. Local markets were shut yesterday for a public holiday.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza