MUMBAI, July 15 (Reuters) – The Indian rupee ended lower on Monday, pressured by a decline in the Chinese yuan and tracking losses in Asian peers amid rising odds of Donald Trump’s re-election as U.S. president.
The rupee closed at 83.5925 against the U.S. dollar, lower than its close at 83.5350 in the previous session.
The dollar index was down 0.2% at 104 while the Korean won fell 0.5%, leading losses among major Asian currencies.
A weaker yuan alongside “routine importer (dollar) demand” pressured the rupee, a foreign exchange trader at a large private bank said.
But dollar sales from foreign and state-run banks, towards the end of the session, capped losses, the trader said.
An assassination attempt on former U.S. President Donald Trump on Saturday is seen as boosting his chances of victory in the presidential polls. Investors have previously reacted to the prospect of a Trump win by pushing long-dated Treasury yields higher and the dollar higher.
The 10-year U.S. Treasury yield was last quoted up slightly at 4.20%.
However, heightened expectations of rate cuts by the Federal Reserve may keep a lid on gains on the dollar. Recent economic data have boosted the odds of a September rate cut to above 95%, according to CME’s FedWatch tool.
“We expect the rupee to underperform amid overall dollar weakness as RBI (Reserve Bank of India) may look to correct rupee overvaluation,” FX advisory firm IFA Global said in a note.
Investors now await remarks from Fed Chair Powell later in the day that may offer cues on the future path of U.S. rates.
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Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala
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