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The Indian rupee was marginally weaker on Thursday amid a pause in the rally in Asian peers. (Photo: Reuters)
The Indian rupee was marginally weaker on Thursday amid a pause in the rally in Asian peers, while forward premiums rose after Federal Reserve minutes and downward revisions to US payrolls made it almost
The rupee was quoted at 83.9425 to the US dollar at 10.36 a.m. IST, down from 83.9225 in the previous session. The rupee, expect for the respite the last few days, has been broadly struggling, which analysts say is largely due to importers.
The “relentless dollar demand from importers” is placing rupee under “significant pressure”, Amit Pabari, managing director at fx advisory firm CR Forex.
Foreign outflows from Indian equities are compounding the rupee’s woes, he said.
Overseas investors have taken out more than $2 billion from Indian equities this month so far, per NSDL data. This is a change from the nearly $4 billion of inflows in July.
Fed minutes reinforce rate cuts
The Fed appeared well on track to cut interest rates at its September meeting after a “vast majority” of officials indicated that in the minutes of its July 30-31 meeting.
The downward revisions to US payrolls added to the confidence that the Fed will cut rates at the September meeting and twice more this year. There was a slight increase in odds that the Fed may opt for larger 50 bps rate cut at next month’s meeting.
Asian currencies were mostly weaker on the day despite this, probably taking a breather following the recent rally, traders said.
The dollar/rupee forward premiums rose in response to the Fed cuts. The 1-year implied yield climbed to the highest since May 2023 and is now up 25 bps this month.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First Published: Aug 22 2024 | 11:33 AM IST
