Rupee weakens on dollar demand from importers, posts slight weekly decline, ET Auto
Rupee weakens on dollar demand from importers, posts slight weekly decline, ET Auto

Rupee weakens on dollar demand from importers, posts slight weekly decline, ET Auto

February 20, 2024
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<p>Investors will keep an eye on inflation data due in both India and the U.S. next week, with the latter likely to serve as a more significant cue for the rupee.</p>
Investors will keep an eye on inflation data due in both India and the U.S. next week, with the latter likely to serve as a more significant cue for the rupee.

The Indian rupee ended weaker on Friday, pressured by dollar demand from importers, including local oil companies, traders said.

The rupee closed at 83.0350 against the U.S. dollar, weaker by 0.1% compared with its close at 82.9550 in the previous session. The local unit also logged a weekly decline of 0.1%.

The dollar index was largely steady near 104.2 and most Asian currencies were rangebound but ended the week lower, pressured by moderation of bets on early rate cuts by the U.S. Federal Reserve.

Odds of the Fed cutting rates in March have dropped below 20%, while those for May have also fallen to about 60%, down from about 73% a week earlier, according to CME’s FedWatch tool.

Elevated oil prices also weighed on the rupee on Friday as Brent crude oil futures rose to a peak of $81.84 after climbing 3% on Thursday amid concerns of a broadening conflict in the Middle East.

Despite the pressure, dollar sales from foreign banks helped cap the rupee’s decline during the week, a foreign exchange trader at a state-run bank said.

The trader expects the rupee to hover between 82.80 to 83.20 over the coming week.

Investors will keep an eye on inflation data due in both India and the U.S. next week, with the latter likely to serve as a more significant cue for the rupee.

Month-on-month core consumer price inflation in the United States is expected to have remained steady at 0.3% in January, according to economists polled by Reuters.

Overall, price action on the rupee “remains lacklustre” and while U.S. inflation data could spur moves in the dollar index, the rupee may not stray much from its current range, said Abhilash Koikkara, head of forex and rates at Nuvama Professional Clients Group.

  • Published On Feb 9, 2024 at 05:16 PM IST

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