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INDIA RUPEE-Rupee weakens tracking most Asian peers, forward premiums decline -April 12, 2024 at 12:53 am EDT

MUMBAI, April 12 (Reuters) – The Indian rupee weakened
on Friday, tracking a fall in its Asian peers, while
dollar-rupee forward premiums also declined as U.S. bond yields
rose amid expectations that the Federal Reserve may delay rate

The rupee was at 83.3950 against the U.S. dollar as
of 10:20 a.m. IST, weaker by 0.2% compared with its close at
83.1850 on Wednesday. Indian financial markets were shut on
Thursday for a local holiday.

The rupee, alongside most of its Asian peers, was under
pressure after U.S. inflation for March came in hotter than
expected, sparking a rally in the dollar index and U.S. bond

The dollar index rose to a near five-month high of 105.53 on
Thursday, while the 10-year U.S. Treasury yield was at 4.57%,
hovering close to its highest level since mid-November.

Odds of a Fed rate cut in June have declined to about 24%,
down from about 66% a week earlier, according to the CME’s
FedWatch tool.

Dollar bids from foreign banks also pushed the rupee lower
in early trading, a foreign exchange trader at a state-run bank

The rupee is unlikely to fall much from here as traders
remain wary of the Reserve Bank of India stepping in to curb
losses near these levels, the trader added.

Most Asian currencies weakened with the Korean won down 0.7%
and leading losses.

“The rupee faces some short-term hurdles, but the downside
will be limited,” Amit Pabari, managing director at FX advisory
firm CR Forex, said.

Meanwhile, dollar-rupee forward premiums declined with the
1-year implied yield down 3 bps at 1.63%,
pressured by elevated near-maturity U.S. bond yields.

India’s inflation data due later in the day is expected to
show that inflation likely eased to a five-month low of 4.91% in
March from 5.09% in February, according to a Reuters poll.
(Reporting by Jaspreet Kalra; Editing by Sohini Goswami)

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