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Monday, March 4, 2024

Indian Rupee Loses 5 Paise Against Dirham in Early Trading

In the early trading hours on Friday, the Indian rupee experiences a depreciation of 5 paise, trading at 83.18 against the US dollar (equivalent to 23.10 UAE dirhams). The decline can be attributed to ongoing foreign fund outflows and the steady increase in crude oil prices.

Market Pressures:

Negative Equity Sentiment and Strong US Dollar

Forex traders point to negative equity market sentiment and a robust US dollar as the primary drivers behind the rupee’s slide.

Interbank Trading: Indian Rupee

Rupee’s Early Performance

Trading in the interbank foreign exchange market saw the rupee open at a weak position of 83.17 against the US dollar, briefly touching its lowest point at 83.20 before settling at 83.18, marking a 5 paise loss compared to its previous closing value.

Global Context: Indian Rupee

Asian Peers Follow Suit

The rupee’s decline aligns with similar trends observed in Asian currency markets, which are influenced by the 10-year US Treasury yield surging to 5%, a level not seen since 2007.

Factors at PlayIndian Rupee

Rising US Treasury Yields

Factors contributing to this rise in yield include slightly higher-than-expected US headline inflation data, strong US economic indicators, and signals from Federal Reserve officials indicating a likelihood of elevated interest rates.

Resilient Market:

Despite Ongoing Conflict

The 10-year US yield remains nearly 40 basis points higher in October, despite the ongoing conflict in the Middle East.

Central Bank Signals:

Federal Reserve’s Stance

Federal Reserve Chair Powell has reiterated the message from other policymakers, emphasizing that the strength of the US economy and a persistently tight labor market may necessitate more stringent borrowing conditions to manage inflation. However, rising market interest rates could potentially reduce the need for central bank intervention.

Policy Outlook:

Rates Unchanged but “Higher for Longer”

Powell has signaled that interest rates are likely to remain unchanged at the November 1-2 meeting but could persist as “higher for longer.” This approach is aimed at controlling inflation while considering the impact of rising market interest rates.

US Labor Market:

Resilient Performance

Recent data reveals the US labor market’s resilience, with weekly jobless claims dropping to a nine-month low.

Real-Time Forex Rates:

Stay Informed

For the latest real-time forex rates, refer to the widget below or visit KT’s dedicated Trading News page.

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