Rupee ends lower pressured by recovery in US yields, greenback

By Jaspreet Kalra

MUMBAI (Reuters) – The Indian rupee closed lower on Thursday, weighed down by a recovery in U.S. Treasury yields and the dollar which clawed back some lost ground supported by stronger-than-expected U.S. retail sales data.

The rupee closed at 83.2325 against the U.S. dollar, lower by 0.11% compared with its previous close at 83.1425.

The 10-year U.S. Treasury yield last quoted at 4.50%, while the dollar index was higher at 104.42, well above the week’s low of 103.98 hit on Tuesday.

U.S. retail sales fell 0.1% month-on-month in October, compared with a Reuters poll estimate of 0.3%.

The rupee is “again stuck in a range”, a foreign exchange trader at a foreign bank said.

While the routine dollar demand is keeping up the pressure, directional momentum since last Friday’s move has “fizzled out”, the trader added.

The domestic currency had plunged to its lifetime low of 83.42 on Friday.

While investors continue to maintain bearish bets on most Asian currencies, short bets on the Indian rupee appear to have eased to their lowest in more than two months, according to a Reuters poll.

Analysts broadly expect the rupee to underperform its Asian peers when the dollar’s strength recedes.

The rupee “is already arguably stronger than justified relative to most of its peer currencies in the region … we would anticipate a more modest appreciation during 2024 than its peers as a result,” ING Bank said in a note.

Currently, the market is in a wait-and-watch mode and the rupee is likely to stay range-bound till the dollar changes course decisively, said Arnob Biswas, head of foreign exchange research at SMC Global Securities.

Investors now await U.S. jobless claims data and Federal Reserve officials’ speeches, both scheduled later in the day.

(Reporting by Jaspreet Kalra; Editing by Sohini Goswami)