MUMBAI: The Indian rupee declined against the dollar on Monday on worries over the likelihood of more Federal Reserve rate hikes, but possible intervention from the central bank helped the currency remain above a key level.

The rupee was at 82.9225 to the US dollar by 10:54 a.m. IST compared with 82.75 in the previous session. The Reserve Bank of India was likely selling dollars via public sector banks on Monday to boost the rupee, traders told Reuters.

The RBI has also been possibly regularly intervening in recent days, according to traders. “If the RBI had not been around in the last several sessions, rupee would be near at least 83.50 and possibly at 84,” a spot trader at a private sector bank said.

The rupee fared better than its Asian peers on Monday on the possible RBI intervention.

Some of rupee’s Asian peers were down by as much as 1% after data released on Friday showed that the core US personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, shot up 0.6% month-on-month in January, the largest increase since June 2022.

Indian rupee little changed as Asian FX struggle against dollar

That was thrice the pace in December and above 0.4% expected by economists polled by Reuters.

In the 12 months through January, the core PCE price index rose 4.7%, compared with 4.3% in the previous session. “The acceleration in the Federal Reserve’s favoured measure of inflation is a big story,” James Knightley, chief international economist at ING Bank, said in a note.

“(Now)talk of a potential 50 basis points move at the March Federal Open Market Committee meeting can’t be completely discounted, although we don’t think they will carry through with it.”

According to the CME FedWatch Tool, futures are pricing in a 27% probability of 50 basis points rate hike in March.