On Thursday, the Indian rupee experienced a marginal decline, primarily influenced by dollar outflows related to equity transactions. Despite this pressure, traders anticipate that the rupee’s downward movement will be restricted by the interest from exporters to sell dollars. As of 10:20 a.m. IST, the rupee stood at 82.8725, exhibiting minimal change from its previous session’s closing rate of 82.8625. Meanwhile, the dollar index registered a slight uptick of 0.1% to 102.88, while Asian currencies generally maintained a narrow trading range.
Market analysts foresee a relatively subdued trading day for the rupee. A foreign exchange trader from a state-run bank commented on the likelihood of continued equity-related outflows exerting slight pressure on the currency throughout Thursday. Notably, on Wednesday, provisional exchange data indicated that foreign investors offloaded Indian equities worth over $500 million, contributing to the rupee’s weakest performance in three weeks.
In the global arena, the 10-year U.S. Treasury yield saw a marginal increase to 4.20% during Asian trading hours, following a 5 basis points (bps) rise on Wednesday. This uptick comes amidst market speculations that persistent inflation in the United States might lead the Federal Reserve to postpone any potential rate cuts.
Current market sentiments suggest a 69% probability of a rate cut by the Fed in June, a slight decrease from the 72% probability recorded a month earlier, according to CME’s FedWatch tool. Conversely, expectations for a rate cut in March have significantly diminished, with the likelihood of a cut in May falling below 10%.
Overall, the Indian rupee’s performance on Thursday is anticipated to be relatively stable, with limited fluctuations expected due to the ongoing dynamics of equity-related dollar flows. Market participants remain attentive to global economic indicators, particularly inflation trends in the United States, as they speculate on the Federal Reserve’s future monetary policy decisions.
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