The Indian rupee fell on Wednesday due to strong dollar demand from importers at the month-end and a stronger U.S. dollar following better-than-expected U.S. consumer confidence data. By 11:20 a.m. IST, the rupee dropped 0.3% to 85.6575 against the U.S. dollar.
Traders noted increased buying of dollars at the daily reference rate set by the Reserve Bank of India, likely driven by corporate payments at the month’s end. The daily fix showed a premium of 0.40 to 0.60 paisa, according to a Mumbai-based bank trader.
Speculation over portfolio dollar outflows linked to a large equity block deal also pressured the rupee. British American Tobacco announced plans to sell a 2.3% stake in Indian consumer goods firm ITC, valued at about $1.4 billion.
In the short term, the rupee is expected to trade between 84.80 and 85.80, said Amit Pabari, managing director at FX advisory firm CR Forex.
Meanwhile, the dollar index rose 0.3% to 99.8, supported by positive U.S. economic data. This also helped Wall Street gain as investors returned from a long weekend.
Asian stock markets mostly strengthened, but India’s benchmark indexes, the BSE Sensex and Nifty 50, slipped slightly.
India’s 10-year government bond yield fell below a key level, driven by expectations of deeper interest rate cuts by the Reserve Bank of India and a drop in long-term U.S. Treasury yields. DBS noted that developed market bond curves flattened amid hopes for more policy support for long-term bonds, with month-end flows likely contributing to the trend.
READ MORE:
