This is a follow up article to: Rupee may drop to near 84/USD
The Indian rupee has a relatively unchanged opening on Friday, hovering near its all-time low despite the positive sentiment seen across Asian markets.
Picture: USDINR price at record low despite positive asian market cues, as observed on the VT Markets app.
Non-deliverable forwards suggest that the rupee (Symbol: USDINR) will open at levels similar to the previous session, around 83.9625, close to its lifetime low of 83.9725 reached on Wednesday.
The underperformance of the Indian rupee is notable given the broader positive sentiment across Asian markets. While other regional currencies have benefited from a softening dollar and positive economic data from the US, the rupee has struggled to gain traction. This divergence suggests that domestic factors, including strong dollar demand and potentially structural weaknesses, are exerting downward pressure on the currency.
The recent rise in US Treasury yields and the strong performance of the S&P 500 index, which had its best day since November 2022, have further complicated the outlook for the rupee. The better-than-expected US jobless claims data has temporarily alleviated recession fears, but it has also led to a retreat in the odds of a 50 basis points Federal Reserve rate cut in September. Currently, the probability of such a cut has decreased to 55%, down from near certainty earlier in the week.
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For traders, the continued weakness in the rupee presents both risks and opportunities. The divergence from broader Asian trends could lead to increased volatility, particularly if external factors such as US economic data or shifts in Federal Reserve policy come into play.
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