🧠 Watchlist Winners: Copy Legendary Investors' Portfolios in One ClickCOPY FOR FREE

Rupee dips; forward premiums rise amid near certainty on Fed rate cuts

Published 08/21/2024, 11:00 PM
Updated 08/22/2024, 01:23 AM
© Reuters. FILE PHOTO: A woman puts flower petals on the new 100 Indian rupee notes as she prays as part of a ritual during Dhanteras, a Hindu festival associated with Lakshmi, the goddess of wealth, in Ahmedabad, India, November 5, 2018. REUTERS/Amit Dave/File Phot
USD/INR
-
DX
-
LCO
-

By Nimesh Vora

MUMBAI (Reuters) - The Indian rupee was marginally weaker on Thursday amid a pause in the rally in Asian peers, while forward premiums rose after Federal Reserve minutes and downward revisions to U.S. payrolls made it almost

The rupee was quoted at 83.9425 to the U.S. dollar at 10.36 a.m. IST, down from 83.9225 in the previous session. The rupee, expect for the respite the last few days, has been broadly struggling, which analysts say is largely due to importers.

The "relentless dollar demand from importers" is placing rupee under "significant pressure", Amit Pabari, managing director at fx advisory firm CR Forex.

Foreign outflows from Indian equities are compounding the rupee's woes, he said.

Overseas investors have taken out more than $2 billion from Indian equities this month so far, per NSDL data. This is a change from the nearly $4 billion of inflows in July.

FED MINUTES REINFORCE RATE CUTS

The Fed appeared well on track to cut interest rates at its September meeting after a "vast majority" of officials indicated that in the minutes of its July 30-31 meeting.

The downward revisions to U.S. payrolls added to the confidence that the Fed will cut rates at the September meeting and twice more this year. There was a slight increase in odds that the Fed may opt for larger 50 bps rate cut at next month's meeting.

© Reuters. FILE PHOTO: A woman puts flower petals on the new 100 Indian rupee notes as she prays as part of a ritual during Dhanteras, a Hindu festival associated with Lakshmi, the goddess of wealth, in Ahmedabad, India, November 5, 2018. REUTERS/Amit Dave/File Photo

Asian currencies were mostly weaker on the day despite this, probably taking a breather following the recent rally, traders said.

The dollar/rupee forward premiums rose in response to the Fed cuts. The 1-year implied yield climbed to the highest since May 2023 and is now up 25 bps this month.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.