MUMBAI: The Indian rupee declined against the dollar on Tuesday, tracking losses in most Asian peers following a fresh set of robust macroeconomic data from the United States.
The rupee was at 82.0475 to the dollar by 10:12 a.m. IST, down from 81.9725 in the previous session.
“Right through from the open, there have been decent dollar bids,” a trader at a public sector bank said. It could be “a bit of” position squaring after the 81.80 support (on USD/INR pair) held, he said, adding that the rupee was in the middle of the near-term support and resistance levels of 82.20 and 81.80 respectively.
Asian currencies struggled on the back of US data that supported at least one Federal Reserve rate hike.
Confidence among US single-family homebuilders improved for a fourth straight month in April, while the New York manufacturing index increased for the first time in five months in April as measures of new orders and shipments surged.
Futures indicate that investors are now almost certain that the Fed will raise rates in May.
The 2-year US yield overnight reached its highest level since March 22.
Investors were betting that with US data holding up and the US banking turmoil having receded, the focus of Fed will be back on inflation, according to analysts.
The dollar index rose by the most in over a month overnight. Few analysts doubted that the dollar’s resurgence will sustain.
“The US dollar’s counter-trend comeback appears to be a correction following a significant decline last week,” Anindya Banerjee, head research - forex and interest rates at Kotak Securities said.
Indian rupee tad weaker as dollar gains on Fed rate reassessment
“A much-needed correction, which could be followed by further declines in the coming days.” The rupee forward premiums were slightly lower following the overnight rise in Treasury yields.
The 1-year implied yield was at 2.31%, hovering at its lowest since mid-March.
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