Author: Nimesh Vora

MUMBAI (Reuters) – The Indian rupee was marginally weaker on Thursday amid a pause in a rally in Asian currencies, while term premiums rose after Federal Reserve meeting minutes and downward revisions to U.S. payroll data sent the rupee nearly

The rupee was trading at 83.9425 per US dollar at 10.36 am IST, down from 83.9225 in the previous session. The rupee, barring a respite in the past few days, has been struggling overall, which analysts say is largely due to importers.

“The continued demand for the dollar from importers” is putting “significant pressure” on the rupee, said Amit Pabari, managing director of currency consultancy CR Forex.

He added that the outflow of foreign capital from Indian equities was deepening the rupee’s problems.

Foreign investors have pulled more than $2 billion out of Indian stocks this month, according to NSDL data, a change from nearly $4 billion inflows in July.

FEDERAL MEETING MINUTES STRENGTHEN RATE CUT

The Federal Reserve appeared to be on track to cut interest rates at its September meeting, after a “vast majority” of officials indicated so in the minutes of its July 30-31 meeting.

The U.S. wage cuts have boosted confidence that the Fed will cut rates at its September meeting and twice this year. Chances have risen slightly that the Fed will cut rates by a larger 50 basis points at its meeting next month.

Still, Asian currencies were mostly weaker on the day, likely taking a break from their recent rally, traders said.

Dollar/rupee forward premiums rose in response to the Fed cuts. The implied 1-year yield rose to its highest level since May 2023 and is up 25 basis points this month.