MUMBAI: The Indian rupee closed slightly weaker on Thursday, pressured by broad-based strength in the dollar on a hawkish reassessment of policy easing by the Federal Reserve, while modest portfolio inflows helped limit the currency’s decline.
The rupee closed at 88.7050 against the U.S. dollar, down about 0.1% on the day.
The dollar index held above the 100-handle, while Asian currencies were down between 0.1% and 0.3% as traders scaled back wagers on a U.S. rate cut next month.
Minutes from the Fed’s October policy meeting showed that many policymakers were opposed to a December rate cut, prompting a pullback in money market odds of a reduction to under 30% from 50% a week earlier.
Even though the hawkish turn weighed on regional currencies, global equities found comfort in Nvidia’s market-topping earnings, lifting the MSCI’s gauge of Asian equities outside of Japan by 1%.
India’s benchmark equity indexes, the BSE Sensex and Nifty 50 rose about 0.5% each as well, boosted by heavyweight Reliance Industries.
Dollar sales from foreign banks picked up in the latter half of the trading session, signalling likely inflows, a trader at a state-run bank said.
The indexes are within touching distance of their record highs hit in September last year, with HSBC expecting the Sensex to rise to 94,000 by the end of 2026, an upside of about 10% from current levels.
Analysts reckon that a breakthrough in U.S.-India trade negotiations could spur inflows into local stocks and a rally in the rupee. Wall Street banks have recently been pitching option strategies on the rupee to position for the same.
“The momentum is gradually shifting in favour of the rupee. Positive cues from U.S.–India trade developments, lower crude costs, and gains in domestic equities are gradually strengthening sentiment,” Amit Pabari, managing director at FX advisory firm CR Forex, said.
Comments
Comments are closed for this article.