Anna 
The Indian rupee remained largely unchanged on Friday, holding steady at 83.3025 against the U.S. dollar, as local demand for the dollar continued to exert pressure. This comes despite the dollar index hovering near its weakest level in four months, standing at 101.89 in Asia hours after a nearly 0.9% drop on Thursday.
The recent strength in the euro and British pound contributed to the decline in the dollar, following statements from the Bank of England and European Central Bank that pushed back on expectations of rate cuts in 2024. ECB President Christine Lagarde emphasized on Thursday that there were no discussions or debates about rate cuts.
While U.S. Federal Reserve Chair Jerome Powell hinted at the possibility of rate cuts, investors are currently pricing in 150 basis points of rate cuts over 2024 in the United States, according to CME Group’s FedWatch tool.
Despite the favorable environment for the rupee, gains have been limited as dip-buying interest from importers has prevented significant appreciation. Traders are closely monitoring the USD/INR pair, with attention drawn to a potential short position if the pair drops below 83.20.
Asian currencies, including the Chinese yuan, mostly traded within a range, while the rupee’s strong support at 83.40 suggests the potential for gains amid supportive global cues, as noted by Amit Pabari, Managing Director at fx advisory firm CR Forex. Additionally, rupee forward premiums experienced a decline due to likely profit booking, with the 1-year implied yield lower by 4 basis points at 1.71%.
