The Indian rupee hit its weakest closing level against the U.S. dollar, concluding at 84.74, marking a decline from the previous session. Despite gains among most Asian currencies, the rupee did not capitalize on these movements, including the offshore Chinese yuan's rise. The rupee's performance comes amid a backdrop of broad-based dollar strength and a decrease in dollar-rupee forward premiums, with the 1-year dollar-rupee implied yield dropping to a four-month low.
Market participants are closely watching the Reserve Bank of India's (RBI) actions, including dollar-rupee buy/sell swaps, which have influenced forward premiums. The RBI's strategy aims to mitigate impacts on foreign exchange reserves and rupee liquidity without directly affecting the rupee's immediate value. Meanwhile, the global financial community is attentive to the U.S. Federal Reserve's potential rate decisions and comments from Fed Chair Jerome Powell. The RBI is also expected to announce its policy decision soon, amidst speculation of monetary policy adjustments following recent economic data.
Source: Reuters