MUMBAI: The rupee declined against the US currency on Thursday, after a three-day rally, in the wake of a broad fall in Asian currencies and position adjustments ahead of the US inflation data.
The rupee was trading at 81.5650 per US dollar by 0504 GMT, compared with 81.4350 in the previous session.
Asian currencies and shares were mostly lower ahead of the data that will have a significant influence on what the US Federal Reserve is likely to do at its next policy meeting in December.
The Fed is widely expected to raise rates once again, but there is uncertainty on whether it will opt for a 50 or a 75 basis points rate hike. Fed fund futures are leaning to a 50 bps hike by a very small margin.
That could change after the US inflation data is out later in the day. US consumer prices are expected to have climbed 0.6% month-on-month in October and by 8% annually. The more important core inflation rate is projected to rise 6.5% year-on-year by economists polled by Reuters.
Any surprise rise above market estimates will support “expectations for a jumbo rate hike”, likely pushing the dollar index to 111.30-111.50 levels, Amit Pabari, managing director at CR Forex, said.
The dollar index was hovering near 110.30. It had climbed about 0.8% on Wednesday.
The dollar’s recovery against major currencies and Asian units is probably leading to speculators “bailing out” or at least reducing their USD/INR short positions, a trader at a private sector bank said.
“Its just too big a risk to be carrying positions overnight,” the trader said.
Indian shares declined in line with rest of Asia, while US equity futures were a shade higher after the overnight selloff.
Oil prices were little changed, taking a breather after three days of losses. Rupee premiums were almost flat.
The rupee was trading at 81.5650 per US dollar by 0504 GMT, compared with 81.4350 in the previous session.
Asian currencies and shares were mostly lower ahead of the data that will have a significant influence on what the US Federal Reserve is likely to do at its next policy meeting in December.
The Fed is widely expected to raise rates once again, but there is uncertainty on whether it will opt for a 50 or a 75 basis points rate hike. Fed fund futures are leaning to a 50 bps hike by a very small margin.
That could change after the US inflation data is out later in the day. US consumer prices are expected to have climbed 0.6% month-on-month in October and by 8% annually. The more important core inflation rate is projected to rise 6.5% year-on-year by economists polled by Reuters.
Any surprise rise above market estimates will support “expectations for a jumbo rate hike”, likely pushing the dollar index to 111.30-111.50 levels, Amit Pabari, managing director at CR Forex, said.
The dollar index was hovering near 110.30. It had climbed about 0.8% on Wednesday.
The dollar’s recovery against major currencies and Asian units is probably leading to speculators “bailing out” or at least reducing their USD/INR short positions, a trader at a private sector bank said.
“Its just too big a risk to be carrying positions overnight,” the trader said.
Indian shares declined in line with rest of Asia, while US equity futures were a shade higher after the overnight selloff.
Oil prices were little changed, taking a breather after three days of losses. Rupee premiums were almost flat.
