MUMBAI: The Indian rupee hit a two-week low on Thursday, tracking losses across Asian peers, as expectations for a US interest rate cut in December waned, while traders said chatter of likely central bank intervention helped cap the rupee’s decline.
The rupee was last at 88.47 against the US dollar, down 0.3% on the day, and near its weakest level since October 14.
Two traders pointed out that the Reserve Bank of India had likely stepped into the non-deliverable forwards (NDF) market to support the rupee.
Merchant demand and flows are largely skewed towards rupee depreciation, but the RBI is expected to keep a lid on sharp declines, a trader at a private bank said.
Asian currencies were down between 0.1% and 0.3%, while US Treasury yields rose after Federal Reserve Chair Jerome Powell signalled that October’s cut may be the last one for 2025.
“What do you do if you’re driving in the fog? You slow down,” Powell said, referring to the lack of official data during a federal government shutdown.
“Short-term pressure on Asian markets is likely, given the rebound in the US dollar and bond yields. Should data disruptions persist into December, the Committee may opt to hold rates steady to wait for more clarity,” J.P. Morgan Asset Management said in an analyst note.
The dollar index turned lower in Asia trading after jumping 0.4% in the previous session.
The US 2-year Treasury yield was last at 3.58% after rising 9 bps on Wednesday.
Elsewhere, US President Donald Trump said that the US will lower tariffs on China to 47%, down from 57% earlier, after meeting his Chinese counterpart, Xi Jinping, in South Korea earlier in the day.
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