MUMBAI, Sept 17 (Askume) – The Indian rupee faced headwinds on Tuesday as the dollar struggled a day ahead of the Federal Reserve’s long-awaited interest rate decision.
At 10:28 am, the rupee was trading at 83.84 against the US dollar, while in the previous session it was at 83.8875.
A currency trader said two large public sector banks have made offers on the USD/rupee pair. He said it was “difficult to ascertain” whether they were bought for the Reserve Bank of India or for clients.
Asian currencies were mostly higher, with the US dollar index steady at 100.70 after falling in the previous three sessions.
The dollar “remains under pressure” as expectations of a rate cut by the Federal Reserve rose ahead of the Fed meeting, said Srinivas Punni, managing director at foreign exchange advisory firm QuantArt Market Solutions.
Perni said that given the high expectations for a 50 basis point rate cut by the Fed, the market could be disappointed if they only cut interest rates by 25 basis points or issue a more “neutral” statement.
The probability of a 50 basis point move has risen to nearly 70% from 30% a week ago. Media reports that Fed officials are considering a 50 basis point cut in interest rates have led investors to raise bets on more aggressive moves at the two-day Fed meeting that begins later today.
Analysts at ANZ Bank said concerns about a slowdown in the labour market outweighed inflation concerns.
