MUMBAI, July 6 (Reuters) – The Indian rupee fell to a three-week low on Thursday as a stronger dollar weighed on it, but the far-forward premium hovered near its lowest level since 2011.
As of 10:44 am (IST), 1 dollar = 82.42 rupees (82.2250 rupees in the first session). The currency is headed for three consecutive sessions of decline.
“It’s safe to assume that this upturn wasn’t what most people thought,” said a foreign exchange salesperson at a bank.
“This means there are importers rushing to hedge and traders having to manage their positions.”
Asian currencies tumbled after the minutes of the Federal Reserve’s June policy meeting showed officials were in favor of raising interest rates further this year.
The Fed had opted for a moratorium at its June meeting, but minutes showed some members could have supported a 25-basis-point rate hike.
“A key element of the June FOMC minutes was that ‘nearly all’ officials seemed to think further tightening was needed this year,” ING Bank said in a memo.
U.S. yields rose and stocks fell. Rupee futures premium fell as US yields and USD/INR rose.
The one-year premium fell to 1.3350 rupees, the lowest level in a decade. One-year implied yields fell to nearly 1.60%.
The dollar index reached a high of 103.46 in Asian hours, supported by the Fed’s interest rate outlook. The Thai baht led the decline among Asian currencies, dropping 0.7%.
The US private payroll and ISM service printouts are due out Thursday and will provide more clues about key parts of the labor market and economy.
Reported by Nimesh Vora.Editing: Eileen Soren
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