Rupee declines amid weakness in Asian peers and Dollar purchases by foreign banks

Rupee vs Dollar: The Rupee weakened on Monday, facing downward pressure from heightened Dollar demand by foreign banks and a broader decline in Asian currencies. Concerns over potential delays in US rate cuts this year further weighed on investor sentiment.

At 10:05 am, the Rupee was trading at 83.41 against the US Dollar, marking a decline from its previous close of 83.34.

The Dollar index experienced a modest decrease of 0.3 per cent, standing at 105.6, following a recovery in the Yen's value. Asian currencies, however, saw widespread losses, with the Indonesian Rupiah leading the downturn with a 0.2 per cent decline.

Early trading witnessed significant Dollar purchases by foreign banks, contributing to the Rupee's depreciation, as highlighted by a foreign exchange trader at a state-run bank. Despite these challenges, some analysts express optimism regarding the Rupee's resilience, projecting a gradual strengthening to levels between 83.20 and 83.00.

The spotlight this week falls on the Federal Reserve's upcoming policy decision scheduled for Wednesday. While the central bank is expected to maintain interest rates at their current levels, investors eagerly await Chair Jerome Powell's commentary for insights into policymakers' perspectives on future rate adjustments.

Recent shifts in market expectations suggest a notable change in sentiment, with the number of anticipated rate cuts by the Fed for 2024 dropping to a single cut. This revision marks a significant departure from earlier forecasts, which had anticipated up to six rate cuts at the beginning of the year, according to data from CME's FedWatch tool.

(With Reuters inputs.)