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Indian rupee falls 7 paise to 84.73 against US dollar during early trade

The currency's pace of decline could moderate heading into year-end, but the bias continues to be towards gradual deprecation below 85

Published: Mon 9 Dec 2024, 10:17 AM

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  • Reuters

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The Indian rupee opens slightly lower on Monday as expectations surrounding the incoming Trump administration's policies keep the dollar well-bid despite heightened hopes of a Federal Reserve rate cut this month.

The rupee was at 84.7250 against the US dollar, down slightly from its close at 84.6875 in the previous session, while dollar-rupee forward premiums nudged higher, aided by heightened odds of a US rate cut in December.

The dollar index was up nearly 0.2% at 106.1 on the day, adding to its 0.5% rise on Friday, while most Asian currencies were weaker.

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Dollar offers by foreign and state-run banks helped limit the rupee's losses in early trading, traders said, in the face of strong dollar demand from importers, including local oil companies.

On the flip side, expectations that the Reserve Bank of India (RBI) will intervene to defend the local currency are likely to keep sharp losses at bay, a trader at a state-run bank said.

The rupee's pace of decline "could moderate heading into year-end," but the bias continues to be towards gradual deprecation below 85, a trader at a state-run bank said.

Meanwhile, dollar-rupee forward premiums rose, with the one-year implied yield up 3 basis points at 2.10% after U.S. payrolls data on Friday solidified hopes a of 25 bp rate cut by the Federal Reserve next week.

Some Fed policymakers said on Friday that they expect policy rates to continue to come down, while injecting a note of caution on the pace.

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