The Indian rupee weakened against the US dollar on Thursday, defying the trend of broad gains in other Asian currencies, Reuters reported. This comes amidst improved expectations of the Federal Reserve cutting interest rates later in 2024. The rupee fell to 83.43 per US dollar by 9:35 AM IST, down from Wednesday's closing rate of 83.37. This decline follows a weaker-than-expected performance by Prime Minister Narendra Modi's coalition in the recent national elections. The rupee rebounded slightly on Wednesday with support from the RBI intervention. Market expects ongoing central bank action to stabilise the currency amid concerns about foreign investor outflows. Foreign investors have net sold over $2 billion worth of Indian equities in the past two trading sessions. Despite this, benchmark Indian stock indices, the BSE Sensex and Nifty 50, were both up around 0.7 per cent in early trading on Thursday. Meanwhile, the US dollar index fell by 0.1 per cent to 104.1 as most Asian currencies gained. Dollar-rupee forward premiums also rose slightly. The one-year implied yield increased by 2 basis points to 1.66 per cent. This rise is attributed to the drop in US bond yields, as per the statement. According to a foreign exchange trader at a private bank, expectations of RBI intervention to limit rupee depreciation are likely to incentivise "natural offers (to sell dollars)" near the 83.50 level.
