The rupee on July 6 ended one month low against the US dollar tracking weak Asian currencies after minutes of the latest FOMC meeting hinted at another rate hike this month. The domestic currency is already under pressure weighed down by persistent dollar demand from importers.
The home currency closed at 82.51 a dollar — a level that was last seen on June 8, down 0.34 percent from its previous close of 82.22. The currency opened at 82.37 and hit a low of 82.55 a dollar. This was the third session when the rupee ended lower.
"The major reason behind the importer’s rush was the expectation of a rebound in international oil prices. After Saudi Arabia, Russia’s call on curbing oil output by 500K bpd might have sent a confirmation of oil bottoming out near the $60-70 zone. Additionally, the preference for Yuan currency in oil settlements by Indian refiners reflects a shift in currency options and highlights the potential impact on global currency markets, specifically regarding the demand for the US dollar", said CR Forex in its note.
Asian currencies weakened after the recently released minutes of the Fed's June meeting revealed that a significant majority of policymakers anticipate the need for additional tightening in U.S. monetary policy, despite their decision to maintain steady interest rates the previous month.
Market expectations reflect this sentiment, with an 86 percent likelihood priced in for a 25-basis point rate hike by the Fed in July, and a nearly 20 percent probability of another 25-basis point increase in September.
Among Asian currencies, Taiwan dollar fell 0.38 percent, Indonesian rupiah down 0.25 percent, Philippines peso lost 0.22 percent, South Korean won 0.2 percent, Malaysian ringgit 0.2 percent, Thai Baht 0.16 percent. Among gainers, Japanese yen rose 0.37 percent, Singapore dollar and China Renminbi were up 0.1 percent each.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 103.25, down 0.12 percent from its previous close of 103.37.
(With inputs from Reuters)
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