Indian rupee weakens amid global dollar strength and investor caution
Indian rupee weakened against the dollar as the greenback strengthened globally due to investors’ risk aversion after an assassination attempt on former US president Donand Trump and as weakness in the Chinese yuan weighed on Asian currencies, dealers said.
The rupee closed at 83.59 against the US dollar on Monday, versus the previous close of 83.53, LSEG data showed. The dollar index touched a high of 104.32
While the rupee did not weaken much against the dollar in absolute terms on Monday, its closing level was not far from the record closing low of 83.64/$1 on June 20
With latest US data showing softer-than-expected inflation numbers in the world’s largest economy, the chances of a September rate cut by the Federal Reserve have climbed above 95%, according to CMEs FedWatch tool. Last week the CMEs FedWatch tool showed 90% odds of a rate cut. Lower US interest rates typically lead to a softer US dollar as global investors seek higher returns in emerging market assets.
“The Indian rupee reacted to weaker Asian currencies. However, the foreign fund inflows and better trade numbers could limit the loss in the rupee. In the near term, spot USDINR has resistance at 83.70 and 83.35. The bias for the pair remains bullish as long as it floats above 83.35,” said Dilip Parmar, research analyst at HDFC Securities.
Indias’ trade deficit narrowed to $20.98 in June, from $23.78 in May, according to data from the Ministry of Commerce & Industry.
The rupee has also reacted to weaker Asian currencies as the Chinese yuan
