Rupee falls to 2-month low on importer dollar demand, awaits Fed decision
The rupee closed at 83.1575 against the U.S. dollar, weaker by 0.15%, compared with its previous close at 83.0350. The rupee touched an intraday low of 83.17, its weakest level since January 18.
Sustained dollar demand from local oil companies and other importers led the rupee lower during the session, a foreign exchange trader at a private said.
Meanwhile, the dollar-rupee overnight swap rate was also under pressure, signalling a potential crunch for cash dollars.
The Reserve Bank of India's intervention to absorb dollar inflows has fuelled the shortage of dollars alongside corporate payment and equity related outflows, the trader added.
The rupee has «reverted to its mean» and is unlikely to weaken significantly from current levels with 83.20-83.25 serving as a strong support, Sajal Gupta, head of forex and commodities at Nuvama Professional Clients Group's institutional desk, said.
The dollar index was rose nearly 0.3% to 104.14, its highest level in nearly three weeks, while most Asian currencies fell.
While the U.S. central bank is widely expected to keep rates unchanged later in the day, investors will keep a close eye on any changes to the Fed's interest rate projections and commentary from Chair Jerome Powell.
The U.S. central bank's dot plot in December had indicated that policymakers expect three cuts of 25 basis points each over 2024.
«The dollar still seems to be lagging the recent pick-up in US rates and even if the Fed did stick with three expected cuts this year, we doubt the dollar would
