MUMBAI: The Indian rupee declined on Thursday on risk aversion, but losses were kept in check on belief that the Reserve Bank of India would sell dollars.
The rupee was at 82.68 to the US dollar by 09:52 a.m. IST, down from 82.5825 in the previous session. The rupee is now in the “radar zone” that has previously prompted RBI to come in and we reckon RBI “will surely” step in and sell dollars, Amit Pabari, managing director at FX advisory firm CR Forex said.
“We expect that the USD/INR pair should top near the 82.70-90 zone and make a reversal towards 82.20-82.00 levels again.”
The rupee and other Asian currencies struggled on risk off fuelled by ratings agency Fitch downgrading the US credit rating. Indian equities also extended losses, following the selloff on US equities.
The up move on US yields further dented demand for Asian currencies and boosted the dollar.
Indian rupee to decline on poor risk appetite, weakness in Asian peers
The 10-year US yield reached 4.12% on Wednesday, highest in just under four months. Apart from the US credit downgrade, the jump in US private payrolls pushed yields higher.
US private payrolls rose by 324,000 jobs last month, the ADP National Employment report showed on Wednesday, well above the 189,000 reading economists polled by Reuters had forecast.
“Already nervous about upside surprises in Friday’s US nonfarm payrolls, US bond investors did not like the ADP Employment Survey,” DBS Research said in a note.
The Thai baht paced losses on Asian currencies, down 0.7%.
The dollar index rose to 102.68.
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