MUMBAI, Sept 13 (Askume) – The Indian rupee rose on Friday as expectations of a 50 basis point interest rate cut by the Federal Reserve next week increased and the rupee’s futures premium against the dollar also rose, supporting most Asian currencies.
The rupee was up 0.05% at 83.9250 at 10:20 am UTC after closing at 83.9650 in the previous session.
The currency has enjoyed some respite after remaining around 84 for most of the week.
Reports from the British “Financial Times” and “Wall Street Journal” showed that the Federal Reserve’s decision to cut interest rates by 25 or 50 basis points next week may be a close decision.
U.S. bond yields and the dollar index fell as investors raised the chance of a 50 basis point rate cut to 43% from 18% a day earlier, according to CME Group’s FedWatch tool.
Asian currencies rose, led by the South Korean won, which rose 0.8%.
The change also boosted the dollar’s forward premium against the rupee, with the 1-year implied yield rising 4 basis points to 2.27%, its highest level since May 2023.
A foreign bank trader said interest in taking forward paid positions may continue, but given the gains in recent sessions, it would be better to “pay on dips” at current levels.
DBS Bank expects the Fed to cut interest rates by 25 basis points next week, but said the Fed “will be more explicit than peers on multiple rate cuts in 2025-2026,” which will still keep pressure on the dollar.
Traders said despite positive cues, the rupee would remain range bound as importers remained interested in the dollar.
Foreign exchange consultancy IFA Global projected the rupee to trade in the range of 83.85 to 84 on Friday.
