INDIAN RUPEE POSTS MODEST GAINS, FOCUS ON FED RATE DECISION

• The Indian Rupee trades with a mild positive bias in Tuesday’s Asian session. 
• The INR is weighed by the month-end US Dollar demand and India’s equity outflows.  
• The Fed Interest Rate Decision will be the highlight on Wednesday. 

The Indian Rupee (INR) trades stronger on Tuesday despite the recovery of the US Dollar (USD). However, the local currency remains under pressure amid month-end corporate demand for USD and substantial foreign fund outflows from Indian equities. Furthermore, the volatile Chinese Yuan and weaker sentiment contribute to the INR’s downside. 

Nonetheless, extended losses in crude oil prices might limit the downside for the Indian Rupee as India is the third largest consumer of oil behind the US and China. Investors will closely watch the US Federal Reserve (Fed) Interest Rate Decision on Wednesday. The Fed is widely expected to keep rates unchanged in the range of 5.25%-5.50% for the eighth time in a row at its July meeting. Market players will shift their attention to the Indian HSBC Manufacturing PMI and US employment data later this week, which will be released on Thursday and Friday, respectively.