• Indian Rupee (INR) rises after losses last week
  • Analysts are turning more bullish on the Rupee
  • US Dollar (USD) is falling after gains last week
  • Hawkish Fed bets have supported the greenback

The US Dollar Indian Rupee (USD/INR) exchange rate is falling at the start of the week after booking gains across last week. The pair rose +0.29% higher in the previous week, settling on Friday at 82.75. At 10:00 UTC, USD/INR trades -0.05% at 82.70 and trades in a range of 82.61 to 82.75.

The Rupee is trading quietly at the start of the week, reflecting muted moves in domestic equities at the start of the week.

The move higher in the rupee comes as analysts at Bank of America securities join analysts from Citigroup in turning upbeat on the Indian rupee.

The analysts highlight the narrow trade deficit, and favorable capital flows as reasons for expecting a further appreciation of the Rupee.

Last year, the Rupee was the worst-performing currency among emerging Asian peers. However, that outlook is now changing after a surprise fall in India’s trade deficit

The US Dollar is falling across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -0.14% at the time of writing at 103.83, after booking gains last week.

The US dollar is edging lower in early trade on Monday but still remains elevated after a series of stronger-than-expected U.S. economic data and ahead of the minutes from the latest Federal Reserve monetary policy meeting.

Last week’s data showed that retail sales, jobless claims, and inflation data are stronger than expected, fuelling bets that the Federal Reserve will have to take interest rates higher than initially expected. Federal Reserve policymakers James Bullard and Loretta Mester even suggested that rate hikes should increase back up to 50 basis points again.

Trading today is expected to be subdued owing to the public holiday in the USA, President’s day. Looking out across the week, the minutes from the latest fed meeting on Wednesday and inflation data on a Friday will be in focus.