MUMBAI, Dec 21 (Reuters) – The Indian rupee fell on
Thursday, weighed down by year-end dollar demand from importers
and risk aversion spurred by a sharp halt in global equity
rallies.
The rupee was at 83.25 against the U.S. dollar as
10:50 a.m. IST, down 0.1% from its previous close of 83.17.
Dollar demand from importers is likely to stay buoyant
heading into year-end, a foreign exchange trader at a state-run
bank said.
“Mostly people square their positions at this time, hence
dollar demand will be there,” the trader added.
The dollar index dipped slightly to 102.3 after
climbing nearly 0.3% overnight on Wednesday, while broader Asian
currencies were mostly subdued.
The 10-year U.S. Treasury yield fell to its lowest level
since July overnight in New York and was last quoted at 3.86%.
The 2-year yield also slipped 7 bps to 4.36% and was little
changed in Asia hours.
The rupee was also pressured by risk aversion as equity
rallies spurred by expectations of the Federal Reserve’s rate
cuts in 2024 faded, with the S&P 500 Index logging its worst
session in nearly three months on Wednesday.
Domestic benchmark equity indices Nifty 50 and
BSE Sensex were down slightly on Thursday as well.
The rupee will persist in its narrow range with downside
likely capped near 83.35 in the near-term, said Gaurang Somaiya,
a forex and rates researcher at Motilal Oswal Securities.
Investors will also keep a keen eye on statements from Fed
officials as they have both signalled and pushed back on rate
cut expectations since Friday, Somaiya added.
Philadelphia Federal Reserve President Patrick Harker said
on Wednesday that while it’s important that the Fed starts to
lower rates, they “don’t have to do it too fast (and) we’re not
going to do it right away.”
(Reporting by Jaspreet Kalra; Editing by Varun H K)
