The Indian rupee experienced its worst session in a month, dropping due to continued dollar demand from importers. Traders are eagerly awaiting the release of the U.S. Federal Reserve’s June policy meeting minutes, as they hope to gain insights into the future rate hike path. The rupee closed down 0.25% at 82.2250 per dollar, hitting its lowest level since June 15 at 82.2475.
Currency analysts and traders believe that the sudden surge in dollar demand from importers was influenced by the inability of the rupee to exceed 81.75 levels, possibly due to intervention from the Reserve Bank of India earlier this week. Jigar Trivedi, a senior analyst at Reliance Securities, noted that the rupee has finally broken out of its stagnant range after weeks of strong foreign inflows, suggesting that the currency could depreciate further.
Stop-losses being triggered also contributed to the rupee’s decline, according to a trader from a public sector bank. The rupee forward premiums have reached their lowest point this year at 1.64%.
Meanwhile, the U.S. dollar index remained steady at 103.07. Market participants are closely monitoring the release of the Federal Open Market Committee’s meeting minutes later in the day. Currently, there is an 86% probability of another quarter-point rate increase in July and a nearly 20% chance of a 25-basis point rise in September.
ING analysts have emphasized the importance of gauging the committee’s views on core inflation dynamics and the possibility of further tightening. Additionally, the market will be sensitive to any details regarding members’ positions on rate cuts.
The Indian rupee’s performance will continue to be influenced by global factors, such as the minutes from the Fed meeting and the dollar’s strength. As the currency faces downward pressure, traders and investors will be closely watching for any developments that could impact its value in the near future.
Disclaimer: This article provides a balanced view of the recent movements in the Indian rupee and does not constitute financial advice.
