By Nimesh Vora
MUMBAI (Reuters) – The Indian rupee declined on Thursday, just shy of an all-time low, pressured by prospects that the Federal Reserve was not likely to be in a rush to cut interest rates and concerns over the impact of escalating Middle East tensions on oil prices.
The rupee was quoted at 83.9375 to the U.S. dollar at 11:10 a.m. IST, down from 83.82 in the previous session. The domestic currency is hovering near its lifetime low of 83.9850, hit a month ago.
The likelihood that the rupee will slump to a new low and slip past the 84 handle is “negligible”, a currency trader at a bank said. He expects the Reserve Bank of India (RBI) to intervene to prevent a decline to 84, like it has done in the past.
The rupee is finding itself “on shaky ground” and now “all eyes are on the RBI”, which is expected to continue its interventions to keep the currency in a narrow range, Amit Pabari, managing director at FX advisory firm CR Forex, said.
ASIA TUMBLES
The Thai baht, Malaysian ringgit and the Indonesian rupiah were all down about 1% to the U.S. dollar on Thursday, while the offshore Chinese yuan weakened past 7.05. The Indonesian central bank intervened to manage the volatility in the currency.
A volatility in oil prices amid the Middle East conflict and the declining probability that the Fed will opt for a large rate cut next month dampened demand for Asian currencies and lifted the dollar.
U.S. private payrolls increased more than expected last month, spurring expectations for a robust reading on the monthly non-farm payrolls figures on Friday.
The payrolls data supported Fed Chair Jerome Powell’s recent remarks that the central bank is in no hurry to cut rates, pushing the odds of a 50-basis-point rate cut in November to 35%.
(Reporting by Nimesh Vora; Editing by Sonia Cheema)
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