Indian rupee hits six-week low on broad dollar strength

The Indian rupee on Wednesday hit a more than six-week low, tracking broader dollar strength on higher US yields and safe haven flows.

The rupee was at 82.4025 against the US dollar by 10:59 a.m. IST, its lowest since April 3, compared to 82.2050 in the previous session. Safe haven demand and resilient US economic data sent US yields higher overnight.

The two-year yield reached at high of 4.12%. US equities declined and the dollar index rose to near 102.60.

The risk sentiment is down, said Srinivas Puni, managing director at QuantArt Market Solutions. A weak China data has pulled down the Asian forex market, he added.

Indian rupee snaps 3-day losing streak on softer dollar

“Dollar index strength may weigh on the rupee,” a trader with private bank said, adding that the currency is expected to remain “pretty range bound”.

US data released overnight indicated that the economy remained resilient despite higher interest rates.

Retail sales rose 0.4% month-on-month in April, with control retail sales up 0.7%. Industrial production rose 0.5% on-month in April, with manufacturing output up 1.0%.

The data and comments by US Federal Reserve officials bought into question the current expectations that the central bank will cut rates later this year.

Chicago Fed President Austan Goolsbee said it was “far too premature to be talking about rate cuts”.

Cleveland Fed President Loretta Mester said rates were not yet at a point where the central bank could hold steady, given stubborn inflation. 

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