On Tuesday, June 18, the Indian rupee strengthened due to dollar sales by state-run banks, likely on behalf of their merchant clients. However, traders anticipate that the rupee's appreciation may be capped as importers could intervene to fulfill their 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 were closed on Monday for a public 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 were probably tied to client orders. Dilip Parmar, a foreign exchange research analyst at HDFC Securities, predicts that the rupee will likely stay within a range of 83.40 to 83.70 this week. He further commented, "Expecting 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 within 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 but still above-trend economic growth, a moderate 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 remain cautious about the future path of interest rates. Investors will also monitor comments from various Fed policymakers later in the day.