Ajit Karn
The Indian Rupee closed at 82.84 per dollar
The Indian rupee declined against the U.S. dollar on Monday, along with other Asian currencies, due to expectations that the U.S. Federal Reserve will raise interest rates further and for a longer duration.
The rupee closed at 82.84 per dollar, up from 82.75 at the previous close.
During the session, the rupee fell to 82.9475, its lowest level since October 20, 2022, when it reached a record low.
Traders speculated that a Reserve Bank of India (RBI) intervention via state-owned institutions prevented further losses on Monday.
In comparison, the Philippine peso fell 1.2% and the Malaysian ringgit fell 1% as the dollar index maintained a seven-week high following the release of January data indicating that the U.S. personal consumption expenditures (PCE) price index rose more than anticipated.
For monetary policy, the Fed monitors the PCE price index.
As a result of the data, investors have priced in a 25 basis point Fed rate hike at the next two meetings in March and May, and are considering the possibility of a third rate hike in June.
The rupee could come under pressure if the dollar index continues to rise, economists from HDFC Bank wrote in a note.
“The USD/INR pair could also shift to a new range above 83 if the RBI does not intervene actively,” they added, anticipating that the central bank would defend the upper limit of the new range between 83.10 and 83.25.
The markets will closely monitor the U.S. manufacturing and services reports for February, due on Wednesday and Friday, respectively, to determine whether January’s robust economic momentum was sustained.
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In addition, India’s economic growth data for the December quarter will be released after the market closes on Tuesday. According to a Reuters poll, the data will likely indicate that growth decreased due to weakening demand.
