Indian rupee weakens slightly against UAE dirham in early trade

The dollar index ticked up to 102.45 and has risen 1% in January so far, after registering consecutive monthly declines in November and December

By Reuters

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Published: Thu 4 Jan 2024, 11:57 AM

The Indian rupee weakened slightly on Thursday, pressured by a fall in its Asian peers and tepid risk sentiment.

The rupee was at 83.3050 (Dh22.69) against the U.S. dollar as of 10:25 a.m., weaker by 0.04% compared with its close at 83.2750 in the previous session.

The dollar index ticked up to 102.45 and has risen 1% in January so far, after registering consecutive monthly declines in November and December.

A moderation of bets on potential rate cuts in the U.S. has supported the dollar's recovery. Investors are pricing in a 27% chance that the Federal Reserve will hold rates steady at its March meeting, up from under 10% a week back, according to CME's FedWatch Tool.

Minutes from the Fed's December policy meeting signalled policymakers' comfort with the progress on controlling inflation while shedding little light on when the cuts might actually commence.

Meanwhile, traders reckon the rupee is unlikely to stray out of its prevailing narrow range amid the central bank's hands-on approach in the currency market.

"It's one big player who is running the market. Now if inflows come in, they will come to buy (dollars)... if outflows come, they will come to sell," a senior FX trader at a foreign bank said, referring to the Reserve Bank of India's two-sided interventions.

Monthly portfolio inflows into India rose to a record high of $10.1 billion in December but the rupee ended the month only slightly stronger.

"The rupee's fundamentals indicate resilience," Amit Pabari, managing director at FX advisory firm CR Forex, said. "Overall, the 83.30-40 range is a strong resistance for the pair."

Asian currencies were mostly lower on Thursday, with the Thai baht leading losses, down by 0.3%.

Investors now await U.S. initial jobless claims data due later in the day followed by the closely watched non-farm payrolls and unemployment data on Friday.

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