MUMBAI: The Indian rupee is expected to decline against the US dollar on Thursday, weighed by hawkish comments from Federal Reserve officials and higher oil prices.
The non-deliverable forwards indicated the rupee would open around 82.60-82.62 per dollar, compared with the 82.4925 closing in the previous session. Fed officials on Wednesday said more interest rate rises are on the cards in the central bank’s efforts to bring down inflation.
Moving to a rate of between 5.00% and 5.25% “seems a very reasonable view,” New York Fed President John Williams said. Fed Governor Christopher Waller said the US central bank will have to keep a tight monetary policy stance for some time.
Minneapolis Fed leader Neel Kashkari said he believes the rate will need to go as high as 5.4% or even higher if the data called for it.
Fed Governor Lisa Cook emphasized that further hikes are needed in gradual steps.
“The Fed rhetoric is now clearly at odds with market pricing of rate cuts later this year,” DBS Group Research said in a note. Fed fund futures are pricing in rate cuts of about 30 to 35 basis points after peaking at around 5.12% in July.
Indian rupee eyes RBI policy decision, weighs Powell’s comments
The Korean won and Indonesian rupiah were down 0.2% each, while the offshore Chinese yuan was hovering just above 6.80 to the dollar.
The 10-year US yield was last at 3.6144% after reaching 3.692% last night, its highest since Jan. 6.
It had hit 3.33% a day before the US jobs report. Brent crude futures inched higher in Asia trading, adding to its overnight advance.
Oil prices are up over 6% in the last three sessions. For the rupee, the 82.90 level remains the key on the downside, and the odds are that we could see narrow intraday ranges for the time being, said a foreign exchange trader.
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