Rupee tad weaker, tracking Asian peers; forward premiums slip
By Jaspreet Kalra
MUMBAI, Oct 1 (Reuters) -The Indian rupee weakened slightly on Tuesday, tracking declines in its Asian peers, while dollar-rupee forward premiums retreated as traders pared bets on aggressive rate cuts by the Federal Reserve.
The rupee INR=IN was at 83.8150 against the U.S. dollar as of 10:15 a.m. IST, marginally weaker than its close at 83.7925 in the previous session.
Asian currencies were down 0.1%-1% after Fed Chair Jerome Powell's remarks on Monday helped boost the dollar and U.S. bond yields.
"This is not a committee that feels like it is in a hurry to cut rates quickly," Powell said.
The dollar index was at 100.8 after rising 0.3% on Monday while the two-year U.S. Treasury, the most sensitive to Fed rate cut expectations, climbed 9 basis points (bps) to 3.64%.
The odds of a 50 bp rate cut in November declined to about 39% after Powell's remarks, down from 53% a day earlier, according to CME's FedWatch tool.
Dollar-rupee forward premiums dipped, with the one-year implied yield INRANPRM1Y=RR down 1 bp at 2.38%.
"Overall message from the Fed is that the labour market is key, and this Friday’s non-farm payrolls will be important in this regard to gauge the path of Fed policy," MUFG Bank said in a note.
U.S. labour market data on Friday is expected to show that the economy added 140,000 jobs in September, while the unemployment rate was unchanged at 4.2%, according to a Reuters poll.
Weaker-than-expected data, though, may once again raise hopes of a larger-than-usual November rate cut.
The rupee "should be back in the 83.90-84.00 range in the next five to six days and will stay in that range for some time," a foreign exchange trader at a private bank said.
Reporting by Jaspreet Kalra; Editing by Sonia Cheema
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