MUMBAI: The Indian rupee was headed for a third day of losses against the US currency on Wednesday, pressured by dollar demand from importers and higher US yields, traders said.
The rupee was at 82.1050 to the dollar by 11:08 a.m. IST, compared with 82.04 in the previous session.
The rupee last Thursday had reached 81.8275 on the back of US inflation data.
“A move from near 81.80 to current levels may not seem much, but you have to take into context how low the volatility is right now,” a spot trader at a private sector bank said.
The normal demand from importers, both cash and in near forwards, amid lack of any triggers was “probably responsible”, he said.
The rise in near-maturity US yields has not helped the rupee.
With investors now almost certain that the Federal Reserve will hike rates at its May meeting and pricing in less aggressive rate cuts this year, the two-year US yield overnight reached a one-month high.
Indian rupee declines as dollar jumps on Fed policy reassessment
One Fed official on Tuesday said that more rate hikes were needed beyond May.
St. Louis Fed chief James Bullard told Reuters in an interview that he favoured 75 basis points of additional tightening against the market consensus for one more 25 bps hike next month and then the potential for cuts later this year.
Asian currencies were flat to lower on the day. Most Asian equity indexes fell, pulling India’s BSE Sensex lower. The dollar index was slightly higher.
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