The Indian rupee strengthened on Tuesday, June 18, due to dollar sales by state-run banks, possibly on behalf of merchant clients. However, traders anticipate that the domestic currency's rise may be capped as importers could intervene to meet hedging needs. As of 10:00 a.m. IST, the rupee stood at 83.47 versus the US dollar (Dh 22.47), marking a 0.08% increase from its previous close at 83.55 (Dh 22.76) on Friday. Indian financial markets remained closed on Monday for a holiday.

A foreign exchange trader at a foreign bank noted, "We anticipated bids following the lower opening (on USD/INR), but state-run banks are offering dollars," suggesting that these offers are likely tied to client orders. Dilip Parmar, a foreign exchange research analyst at HDFC Securities, predicts that the rupee will trade within a range of 83.40 to 83.70 this week, adding, "Expect a slight depreciation before the rupee gains strength."

Meanwhile, the dollar index rose 0.1% to 105.4 during Asian trading hours, with most Asian currencies trading in a narrow range ahead of the U.S. retail sales data release. This data could impact expectations regarding when the Federal Reserve might start reducing policy rates. Philadelphia Fed President Patrick Harker stated on Monday, "I believe one rate cut would be suitable by year's end," based on his scenario of slowing yet still above-trend economic growth, a modest increase in unemployment, and a gradual return to the U.S. inflation target.

Although recent data suggests a cooling of U.S. inflation, Fed officials continue to adopt a cautious approach regarding the future path of interest rates. Investors will also monitor comments from several Fed policymakers later in the day.