ICCK

The Indian rupee is likely to decline slightly at open on Tuesday, in spite on an uptick on most Asian currencies after a U.S. inflation print reinforced expectations the Federal Reserve will cut rates several times next year.

Non-deliverable forwards (NDFs) indicate the rupee will open at 83.18-83.20 to the U.S. dollar compared with 83.14 on Friday. Indian markets were off on Monday.

NDFs indicating a lower opening (for the rupee) "is nothing" and "merely reflects how directionless it all is," a foreign exchange trader at a bank said.

"The dips (on USD/INR) have been bought into and that may be it."

Asian currencies were up 0.1% to 0.4% after data out Friday indicated that U.S. prices fell in November for the first time in more than 3-1/2 years, pushing the annual increase in inflation further below 3%.

The personal consumption expenditures (PCE) price index, fell 0.1% month-on-month in November, while the core PCE measure increased less than expected.

After Friday's print "the required December monthly print to reach Fed's forecast for 2023 of 3.2% (Q4/Q4) is around 0.2% month-on-month," Morgan Stanley said in a note.

The data is likely to further spur bets that the Fed will not be holding rates this high for much longer.

Investors are pricing in high probability of a rate cut next March and are looking at a total of 150 basis points of rate reductions in 2024.

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