Rupee sees biggest drop since mid-March; premiums fall – Times of India

MUMBAI: The Indian rupee posted its biggest single-day fall since mid-March on Monday, pressured by broad strength in the dollar, weakness in the yuan, and likely hedging by importers following robust US jobs data late on Friday.
The rupee closed trading at 82.67 per dollar compared with 82.3050 on Friday. During trade, the unit touched a low of 82.66 and shed 0.44% on day, to mark its worst session since March 14.
Dollar buying in the non-deliverable forwards (NDF), the yuan being under renewed pressure and importers’ demand contributed to the rupee’s fall, a trader said.
It “would look like” the respite rupee had seen over the last weeks has played out, he added.
The dollar edged up against major peers, as markets priced in around a 1-in-4 chance of the U.S. Federal Reserve raising benchmark rates this month after robust jobs data.
However, analysts are not expecting a much sharper fall from current levels in the rupee.
“INR might not see any significant depreciation move. The base case is that the current range will continue to hold for more days,” said Srinivas Puni, managing director at QuantArt Market Solutions.
In the immediate future, traders will focus on the Reserve Bank of India’s policy decision on Thursday where it is widely expected to leave the repo rate unchanged at 6.50% after having surprised markets by hold rates in April, going against widespread bets of a 25 bps increase.
In the global context, the next big event being eyed is the U.S. consumer inflation data on the June 13 followed by the Fed decision on the June 14, Puni said.
The offshore Chinese yuan declined to 7.1295 to the dollar, not too far from the 2023 low touched on Thursday. The jump in U.S. treasury yields following the jobs report dented demand for the Chinese currency, traders said.
The dollar index, the gauge of the greenback’s performance against six major currencies, was up 0.2% while benchmark 10-year US yield rose over 8 basis points.
Tracking the move higher in U.S. yields, rupee forward premiums dropped. The 1-year implied yield declined to 1.70%, the lowest since December 9.