Indian rupee to receive help from pullback in oil, traders eye US inflation

The Indian rupee on Thursday will be boosted by the pullback in oil prices and softer US Treasury yields, while investors wait for the important US inflation data due later in the day.

Non-deliverable forwards indicate rupee will open marginally higher than 83.1875 in the previous session.

Brent crude dipped in Asia to $85.40 per barrel, adding to Wednesday's 2% fall fuelled by the larger-than-expected rise in US inventories.

Brent has surrendered a large part of the rally prompted by the military conflict in the Middle East and is now only about 1% higher than what it was prior to the crisis.

"The relief on oil makes it all the more likely that we will not see an upside breakout (on USD/INR)," a spot forex trader at a mid-sized private sector bank said.

"Expect range of 83.10-83.20 today before we see the US and India inflation prints."

India's inflation data is due after market hours.

Meanwhile, headline US consumer inflation index (CPI) is expected to rise 0.3% month-on-month. The more critical core measure is forecast to increase at the same pace, according to economists polled by Reuters.

The data comes in the wake of investors pushing the probability of a rate hike by the Federal Reserve at the next meeting to less than 10%.

Comments by Fed officials that the jump in long maturity US yields may allow the central bank to not raise the policy rate more has impacted the outlook for the Oct. 31-Nov. 1 meeting.

Data released on Wednesday showed that US producer price index (PPI) rose more than expected in September.

"Today's US CPI inflation may surprise like yesterday's PPI inflation," DBS Research said in a note.

The 10-year US yield was just below 4.60%. Safe-haven demand on account on the Middle East conflict and less dovish comments from Fed officials has prompted yields to pullback from multi-year highs.