MUMBAI: The Indian rupee was marginally higher on Friday, while its Asian peers were weaker in the lead-up to the monthly US jobs report that analysts say will shape expectations around the March Federal Reserve policy decision.
The rupee was at 83.2050 to the US dollar at 09:58 a.m. IST, up from 83.23 in the previous session.
The Indian currency has had a better beginning to 2024 than its Asian peers.
The rupee is marginally up from December, while a pullback in Fed rate cut expectations has spurred a decline on other Asian currencies.
The US non-farm payrolls data due Friday is an important data point for investors looking to gauge how many times the Fed is likely to cut rates this year.
Investors are currently pricing in 140 basis points of total interest rate cuts this year and a near 70% chance of a rate cut in March.
“Today’s jobs data is very important for markets and the rupee,” Srinivas Puni, managing director at FX advisory firm QuantArt Market Solutions, said. Good data “could trigger a repricing of Fed expectations”, he added.
Indian rupee weakens slightly tracking decline in Asian peers
Economists polled by Reuters expect the US economy to have added 170,000 jobs in December, with the unemployment rate pegged at 3.8% and wage growth at 0.3% month-on-month.
“In our view, a print on nonfarm payrolls of 200,000 or better, along with beats on average hourly earnings, participation, or average weekly hours, is likely to reduce market expectations for rate cuts beginning in March or, equivalently, fewer cuts over the course of 2024,” BofA Securities said in a note.
The risk of an “upward beat” on the jobs number has increased marginally following Thursday’s data, a FX trader at a bank said.
US private payrolls rose more than expected in December and jobless claims dropped to a two-month low, data released Thursday showed.
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