The Indian rupee opened weaker against a relatively steady US dollar on Wednesday, with Jerome Powell’s Jackson Hole speech in focus. However, easing oil prices may lower the demand for the greenback.
The rupee weakened 3 paise to open at 83.82 against the US dollar, according to Bloomberg data. The domestic currency closed at 83.79 on Tuesday.
The dollar index recorded a seven-month low, in correspondence with a falling trend in US Treasury yields and intense dovish bets on the US Federal Reserve, said Kunal Sodhani, vice president of Shinhan Bank.
“There remains a divergence in aggressive market anticipation for rate cuts and US data points, thus this aggressiveness may cool off,” he said.
For the rupee, 83.60 acts as a base while 83.90 is a resistance, he said.
Fed Governor Michelle Bowman remains cautious about any shift in the policy because of what she sees as continued upside risks for inflation. She warned that overreacting to any single data point could jeopardise the progress already made, Sodhani noted.
The preliminary US S&P Global PMI for August is due on Wednesday. If the report shows a better than expected outcome, it could cap the downside for the US dollar, he said.
Market participants would keenly scrutinise the FOMC meeting minutes, due later in the day, for cues about Fed policy stance.
