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UAE: Indian rupee dips against dirham on poor risk appetite, weakness in Asian peers

US equity futures and Asian shares dropped on Wednesday after Fitch downgraded the US long-term foreign currency ratings, reflecting likely fiscal deterioration over the next three years

Published: Wed 2 Aug 2023, 10:26 AM

Updated: Wed 2 Aug 2023, 10:27 AM

  • By
  • Reuters

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Reuters file photo

Reuters file photo

The Indian rupee opened lower on Wednesday on the back of a decline in Asian currencies and weak risk appetite after rating agency Fitch cut the US credit rating.

The South Asian currency dropped to around 82.32-82.34 to the US dollar (22.43-22.44 against the UAE dirham) compared with 82.2550 (22.41) in the previous session.

At around 9.45am, it was trading at 82.47 to the US dollar (22.47 against the dirham).

[Editor's Note: For real-time forex rates, click the widget below or visit KT's dedicated Trading News page here.]

"Let's see if today's session is any different from yesterday's and if there is a follow up to the opening move higher (on USD/INR)," a forex trader at a bank said.

The Indian rupee had declined at the opening on Tuesday but ran into support at 82.30-82.35.

US equity futures and Asian shares dropped on Wednesday after Fitch downgraded the US long-term foreign currency ratings to AA+ from AAA, reflecting likely fiscal deterioration over the next three years and repeated down-the-wire debt ceiling negotiations.

Asian currencies dropped while the dollar index rose to 102.16. The 10-year US yield inched lower in the Asia session.

"The Fitch downgrade should have minimal negative impact on the allure of U.S. Treasuries," DBS Research said in a note. "High inflation and growth remain the key triggers for bond demand."

In the data out on Tuesday, a report suggested U.S. manufacturing might be stabilising at weaker levels in July amid an improvement in new orders, though factory employment dropped to a three-year low.

U.S. private payrolls data is due later in the day. A report on how the U.S. non-manufacturing sector is faring is out on Thursday, followed by the non-farm payrolls report on Friday.

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