MUMBAI: The Indian rupee was slightly weaker in early trading on Thursday as dollar sales by exporters countered worries over the jump in US Treasury yields following a hawkish Federal Reserve policy, traders said.
The rupee was at 83.0975 by 11:15 a.m. IST, compared with 83.0725 in the previous session.
Exporters who were previously on the sidelines are likely to be active near the current levels, a foreign exchange sales executive at a private bank said.
Still, USD/INR is likely to trade with a “buy on dips” bias, a forex trader at a private bank said.
The rupee’s Asian peers were weaker following the surge in US Treasury yields after the Fed struck a hawkish tone.
The median dot plot in the Fed’s summary of economic projections (SEP) showed 50 basis points of rate cuts in 2024, which is down from 100 bps that officials had projected in June.
Both near and far US Treasury yields climbed to multi-year highs earlier in Asia hours with the 2-year yield climbing to 5.20% and the 10-year yield rising to 4.44%.
Meanwhile, the dollar index hit a six-month high.
“The FX market has reacted to the Fed’s hawkish pause by taking the dollar” higher,“ ING Bank stated in a note.
The rupee has been at risk of slipping to a record low against the dollar, but likely intervention from the Reserve Bank of India held it off.
The rupee will likely be in the 83-83.25 range in the near term and could require a fresh trigger to break out, Apurva Swarup, vice president at Shinhan Bank India said, adding that “yesterday’s intervention may cast a shadow on today’s session”.
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