Written by Nimesh Vora
MUMBAI (Reuters) – The Indian rupee fell slightly on Thursday as a rally in peer Asian currencies paused, while futures premiums rose after Federal Reserve minutes and downward revisions to U.S. payrolls pushed it close to two-week lows.
The Indian rupee was at 83.9425 per US dollar at 10.36 am IST, down from 83.9225 in the previous session. The rupee, barring a recovery in the past few days, has been broadly weak, which analysts say is largely due to importers.
“The continued demand for dollars from importers is putting the rupee under significant pressure,” said Amit Papari, managing director of foreign exchange consultancy CR Forex.
He added that foreign fund outflows from Indian stocks were exacerbating the rupee’s problems.
Foreign investors have pulled over $2 billion from Indian stocks so far this month, according to NSDL data. That’s a change from inflows of around $4 billion in July.
Fed minutes confirm rate cut
The US Federal Reserve appears on track to cut interest rates at its September meeting after a “substantial majority” of officials indicated that in the minutes of its July 30-31 meeting.
Downward revisions to U.S. payrolls data added to confidence that the Federal Reserve will cut interest rates at its September meeting and twice more this year. There was a slight increase in the odds that the Fed will opt for a larger 50 basis point rate cut at its meeting next month.
However, Asian currencies were mostly lower during the day, with traders saying this may be due to taking a break after the recent rise.
USD/RUB forward interest rate premiums have risen in response to the Fed cuts. The implied one-year yield rose to its highest since May 2023 and is now 25 basis points higher this month.
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