The Indian rupee falls slightly against the U.S. dollar, driven by strong demand for the greenback and weak regional currencies. The Reserve Bank of India (RBI) likely intervened to limit losses by selling dollars through state-run banks.
As of 10:50 a.m. IST, the rupee traded at 86.9550 per dollar, down from its previous close of 86.8775. This decline came as dollar bids increased, reflecting a 0.30/0.50 paisa premium on the daily reference rate.
State-run banks were seen selling dollars near the 86.94-86.95 level, signaling possible RBI intervention. This move aimed to stabilize the rupee amid volatile forex markets.
Meanwhile, Asian currencies dropped between 0.1% and 0.4%, contributing to further rupee weakness. The U.S. dollar index rose 0.3%, extending its recovery from a recent two-month low.
Rising U.S. bond yields added pressure on the rupee. The 10-year Treasury yield climbed four basis points to 4.51%, while the 1-year U.S. Treasury yield also increased. This trend negatively affected dollar-rupee forward premiums, which fell by two basis points to 2.11%, marking their lowest level in two months.
Market participants believe the Federal Reserve will keep rates steady. However, expectations are growing for an RBI rate cut in April, which could further weaken the rupee. Fed officials, including Governor Michelle Bowman, emphasized the need for more evidence of declining inflation before considering policy adjustments.
The RBI’s upcoming decision will be crucial for forex traders. Swap dealers project the 1-year yield may test the 1.95% support level, reflecting market uncertainty.
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The Indian rupee falls as strong dollar demand pressures forex markets. RBI intervention helps stabilize losses.
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