MUMBAI: The Indian rupee was flat on Thursday while dollar-rupee far forward premiums dipped to a one-month low hurt by the repricing of the Federal Reserve’s rate cut path, with odds of the central bank skipping a rate cut in November nudging higher.

The rupee was at 83.9550 as of 10:20 a.m. IST, nearly unchanged from its close at 83.9625 on Wednesday.

While the rupee remains a whisker away from its record low of 83.9850 and is facing multiple headwinds including outflows from local equities and higher US bond yields, the Reserve Bank of India’s firm defence has kept declines at bay, traders said.

The 10-year US Treasury yield rose to an over two-month peak of 4.07% in Asia trading as investors priced in relatively shallow Fed rate cuts over the remainder of 2024.

Odds of a 25-basis-point rate reduction in November have risen to about 85% from 65% a week earlier, while those of the Fed keeping rates unchanged have ticked up to 15%, according to CME’s FedWatch tool.

The repricing of Fed rate expectations has pegged back dollar-rupee far forward premiums, with the 1-year implied yield dropping 19 basis points over October so far to a one-month low of 2.20%.

Asian currencies were mostly weaker by 0.1% to 0.3% on Thursday while the dollar index was at 102.8, hovering close to its highest level in nearly two months.

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“Markets will await the September US CPI (Consumer Price Index) data today, where a hotter than expected print could provide impetus for the US dollar to strengthen more,” MUFG Bank said in a note.

The inflation data is expected to show that core consumer prices rose 0.2% month-on-month in September, the same pace as the prior month, according to a Reuters poll of economists.