Indian rupee falls as Fed minutes prop dollar



By Anushka Trivedi

MUMBAI, Aug 18 (Reuters) - The Indian rupee slipped on Thursday against a steady greenback that found support from minutes of the U.S. Federal Reserve's last meeting that hinted higher interest rates could stick for longer.

The partially convertible rupee INR=IN ended at 79.6725, having flirted with the key 79.70 level occasionally during the session. The local unit had closed at 79.4450 on Wednesday.

Traders widely expect the rupee to tread the 79-80 range for at least another week, with no major events around the corner.

"Within that broad range, there is choppiness depending on sentiment. A 25-30 paise broad move one day gets covered the next day, so within this range there's volatility," Gaurang Somaiya, an analyst at Motilal Oswal said.

Overall mood was quite sombre in Asian emerging markets as the region's economic engine China's currency CNY=CFXS continued its poor run with a 0.2% decline to a three-month low.

The yuan is down 0.7% so far this week after the People's Bank of China slashed interest rates on Monday slammed by harsh COVID-19 lockdowns and a crisis in the property market that hit consumer and business confidence.

Continued capital outflows from Chinese markets and flare-ups between Washington and Beijing are a potential threat to the rupee as investor sentiment towards Asia could decline in the backdrop of a resurgent dollar, said a trader at a private bank.

Falling oil prices were no respite to the rupee on Thursday as the dollar climbed to a three-week high after minutes released overnight from the Fed's July meeting showed officials found "little evidence" of inflation pressures easing.

The minutes flagged an eventual slowdown in the pace of hikes, but not a sharp switch to cuts in 2023 that traders were pricing in to interest-rate futures. 0#FEDWATCH

Meanwhile, the benchmark 10-year government bond yield IN065432G=CC rose to 7.2421%, as traders took profits on recent gains heading into the auction of a new 10-year note due Friday.


Reporting by Anushka Trivedi in Mumbai

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.