Rupee weakens to nearly 2-week low driven by dollar outflows
The Indian rupee weakened as it slipped to the 83 level against the US dollar due to broad weakness in Asian currencies, concerns about China's economic growth, and likely dollar outflows.
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Posted 9/5/2023, 10:15:00 AM
reuters.com
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The US dollar weakened slightly against major peers as traders awaited a speech from Federal Reserve Chair Jerome Powell, while the yen pulled away from a nine-month low and China's yuan briefly rose following attempts to bolster the currency.
The Indian rupee is expected to rise due to a pullback in U.S. Treasury yields and weak economic data, leading to a favorable near-term outlook.
The Pakistani rupee weakened further against the US dollar in the interbank market due to higher demand and uncertainty, while the open market remained stable; however, insiders noted that currency dealers were selling the dollar at higher rates in the open market.
The rupee's decline against the US dollar is being attributed to the powerful influence of the grey market and the International Monetary Fund's involvement in Pakistan's financial system, leading to a loss of control over the exchange rate and economic uncertainties.
The Pakistani rupee has fallen below 300 to a US dollar due to factors such as the rise of the dollar, uncertainty surrounding general elections, and a political/judicial/constitutional crisis, resulting in eroded business confidence, increased inflation, and reduced industrial output.
The Indian rupee remains steady against the US dollar due to corporate dollar demand and importers' activities.
The Indian rupee is expected to strengthen against the US dollar due to weaker-than-expected US job openings, causing a decline in the dollar index and Treasury yields.
The Indian rupee weakened for the second day as demand for the US dollar and equity-related outflows put pressure on the currency despite lower US treasury yields and a softer dollar.
The US dollar weakened against major counterparts due to disappointing economic data, leading to a rally in gold prices and a less dovish Federal Reserve outlook, while the Australian and New Zealand Dollars performed well due to gains in Wall Street; crude oil prices also rallied despite deteriorating economic conditions in China.
Emerging market currencies are expected to struggle to recover from their losses this year due to high U.S. Treasury yields, safe-haven demand, and a slowing Chinese economy, keeping the dollar strong, according to a Reuters poll of FX analysts.
The Indian rupee could reach record lows against the U.S. dollar if oil prices continue to rise, according to the head of global foreign exchange at Jefferies, Brad Bechtel, although he believes the rupee will be one of the more stable currencies in emerging markets. The rupee is currently moving between 83 and 85 against the U.S. dollar, and if oil prices were to fall, it could fall close to the 82 levels.
The Indian Rupee is weakening against the US dollar, causing concern for Indian authorities who fear that it could impact the country's import and export sectors, with suspicions that India may be taking measures to limit the dollar's growth; similarly, other BRICS member countries like China and Japan are also trying to curb the US dollar's growth.
The value of the Indian rupee is at risk of declining significantly due to surging oil prices and the dollar's rally, despite interventions by the Reserve Bank of India to prevent a fall.
The yen weakened against the dollar as the Bank of Japan announced it would maintain its accommodative monetary policy, with little indication of rolling it back.