The rupee was at 83.86 against the U.S. dollar as of 10:15 a.m. IST, compared to its previous close of 83.7925.
The currency had touched a two-week high of 83.7550 in the previous session, but pulled back as importers bought dollars, traders said.
The rupee is broadly expected to hover between 83.70 and 83.90 in the near term, with traders taking cues from any shift in expectations of the depth and pace of rate cuts the U.S. Federal Reserve may deliver.
Investors are currently pricing in about 100 basis points of rate cuts over 2024. Swap traders will keep a keen eye on revisions to U.S. payroll data alongside the minutes of the Fed’s latest policy meeting, both due later in the day. The revised data will pertain to the 12 month-period ended March 2024 and may signal that job growth may have been weaker than estimated. “The (U.S.) Bureau of Labour Statistics could revise lower the nonfarm payroll employment by about 300,000 to 1 million jobs over the period from April 2023 to March 2024. So, the labour market may not have been as strong,” MUFG Bank said in a note.
Weakness in the data could “once again spur recession concerns and drive the 1-year yield to 2.10%-2.11%,” a swap trader at a state-run bank said. The 1-year implied yield was last quoted up 2 bps at 2.06%.
Concerns of a slowdown in the U.S. could also weigh on risk appetite, prompting outflows from local equities, the trader added.
Overseas investors have net sold nearly $2.6 billion of local stocks so far this month.
