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Rupee falls 0.2% hits 13-week low, weighed down by strength in dollar

Indian rupee hit a 13-week low, weighed down by broad strength in the dollar, while markets looked for developments on the U.S. debt ceiling and trajectory of rate hikes in the world's largest economy

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Reuters MUMBAI

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MUMBAI (Reuters) - The Indian rupee hit a 13-week low on Monday, weighed down by broad strength in the dollar, while markets looked for developments on the U.S. debt ceiling and the trajectory of rate hikes in the world's largest economy.
The rupee ended down 0.2% at 82.8275 to the U.S. dollar, compared to its close of 82.66 in the previous session. It had touched its lowest since Feb. 27 at 82.85, early in the session.
The spike in the dollar index has changed the trading range for the rupee to 82.50-83 from its long-time range of 81.60-81.90, said Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors.
If this strength in USD/INR continues, the Reserve Bank of India (RBI) will definitely protect the rupee, Bhansali added.
The U.S. dollar index has gained nearly 2% over the last two weeks on better-than-expected U.S. economic data and hopes of a breakthrough in U.S. debt ceiling talks.
The market is eyeing a key meeting between U.S. President Joe Biden and House Republican Speaker Kevin McCarthy on Monday to discuss the debt ceiling.
Meanwhile, the U.S. Federal Reserve chief on Friday said it is still unclear if U.S. interest rates will need to rise further and the central bank would now make decisions "meeting by meeting."
"The Fed minutes on Wednesday will be scanned closely for hints about a pause, while hawkish hints from the document could help rebuild some tightening expectations for June (should debt ceiling talks progress) and keep supporting the dollar," ING analysts said in a note.
On the domestic front, the USD/INR forward premiums dropped after the RBI said it would withdraw its highest denomination 2,000-rupee notes from circulation. The 1-year implied yield dropped to 1.91%, hovering near December lows.
 
(Reporting by Nallur Sethuraman in Mumbai; Editing by Janane Venkatraman)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: May 22 2023 | 5:10 PM IST

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