Rupee dips tracking Asia FX, eyes Fed chief testimony this week


Bengaluru (Reuters) – The Indian rupee inched lower on Monday, tracking the decline on Asian peers, while traders eyed clues on the Federal Reserve rate hike path this year from its chief’s congressional testimony this week.

The rupee was trading at 81.99 per dollar by 10:24 a.m. IST after closing at 81.93 in the previous session. It rose to 81.8575 on Friday, its highest since May 12 on Friday, and saw its best week in over three months.

U.S. markets are closed on Monday in observance of Juneteenth.

Asian currencies were trading between 0.2%-0.9% lower on Monday. The dollar index was little changed against major peers after falling 1.2% the previous week, the most in five months.

As Asian currencies are weak, there is not much reason for the USD/INR pair to fall sharply, said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.

After several central bank rate decisions last week, investors will watch out for comments from a host of Federal Reserve speakers this week, including Chair Jerome Powell’s congressional testimonies on Wednesday and Thursday.

Last week, the Fed kept rates unchanged but signalled two more rate hikes in 2023.

Investors are currently pricing in a 69% probability of a quarter-basis-point hike in July.

However, bets of further rate hikes have ebbed slightly after mixed U.S. data last week.

Weaker activity and employment, together with a more pronounced moderation in core inflation, will ultimately persuade the Fed that it does not need a final hike in September, Capital Economics said in a note.

Still some Fed officials struck a hawkish tone on Friday.

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