The dollar index was a touch weaker at 100.4 while most Asian currencies advanced, led by the Malaysian ringgit and Thai baht, both 0.5% higher
The Indian rupee dropped on Monday, pressured by dollar demand from foreign banks, while most of its Asian peers gained after China’s economic stimulus measures over the weekend boosted risk sentiment.
The rupee was at 83.7850 against the U.S. dollar as of 5:20 am GMT, down 0.1% on the day.
Strong dollar bids from a London-based and a New York-based bank pressured the rupee in early trading, a trader at a state-run bank said, adding that the currency’s intra-day decline should be limited to 83.85.
The dollar index was a touch weaker at 100.4 while most Asian currencies advanced, led by the Malaysian ringgit and Thai baht, both 0.5% higher.
While the rupee is set to post its first monthly gain since June, it continues to lag behind regional peers that have risen between 0.3% and 5.4% this month.
The rupee, after experiencing a decent appreciation, has begun drifting back toward its typical range. This shift is driven by month-end dollar demand from importers, along with the RBI’s active management of the currency, according to Amit Pabari, MD at FX advisory firm CR Forex.
The rupee had hit a near three-month high of 83.4350 earlier in the month but has since pared gains.
Meanwhile, dollar-rupee forward premiums edged up, with the 1-year implied yield adding 1 bp to 2.40%, near its highest level since May 2023.
Focus today will be on remarks from Fed Chair Jerome Powell, who may provide insights into the future direction of U.S. policy rates.
Interest rate futures are currently pricing in 75 bps of rate cuts for 2024, with nearly-even odds for a 50 or 25 bp cut in November.
